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Dec 28 2012

UPDATE 5-Oil slips after EIA inventory data, budget talks set

* White House to host budget talks with congressional leaders

* U.S. crude stocks slip, products stocks up last week-EIA

* Middle East turmoil remains supportive to oil

* Coming up: CFTC positions data 3:30 p.m. EST Friday

(Recasts with updated prices, market activity; changes byline and dateline, pvs LONDON)

By Robert Gibbons

NEW YORK, Dec 28 (Reuters) - Oil prices eased in choppy trading on Friday after government data showed U.S. fuel stockpiles rose sharply and crude stocks fell less than expected last week.

Crude futures had edged up ahead of the oil inventory data as investors awaited a White House meeting later on Friday where lawmakers will try to cut a budget deal to avert looming automatic tax hikes and spending cuts that many fear will push the economy into recession.

"All eyes are on Washington, where the president and congressional leaders are scheduled to meet ... to try and hammer out a deal that avoids the so-called 'fiscal cliff,' Addison Armstrong, senior director for market research at Tradition Energy, said in a research note.

Oil prices have been buffeted recently as investors gauge the likelihood that tax increases and lowered spending set to take effect on Jan. 1 will be avoided by a last-minute agreement before the end of 2012.

Brent and U.S. crude futures were on pace to post weekly gains, but while Brent nears a full-year increase of about 3 percent, its smallest in four years, U.S. crude is on track to end 2012 down more than 7 percent.

Approaching the new year, potential threats to Middle East oil supplies from ongoing turmoil in the region have kept oil bolstered, along with signs of a rebound in China's economic growth and more traction in the U.S. economic recovery.

Brent February crude fell 51 cents to $110.29 a barrel by 12:35 p.m. EST (1735 GMT), after reaching $111.38 but failing to hold above the 100-day moving average of $111.32.

Brent's $109.83 session low tested support below the 200-day moving average at $109.94.

U.S February crude was down 14 cents at $90.73 a barrel, having traded as low as $90.32, below the 100-day moving average of $90.63. The $91.49 session peak was the highest front-month crude price since October.

U.S. OIL INVENTORIES

U.S. crude oil inventories fell, but only by 586,000 barrels, in the week to Dec. 21, the Energy Information Administration said on Friday.

The crude stocks drop was less than the drop of 1.9 million barrels expected in a Reuters survey of analysts.

While crude stockpiles slipped, distillate stocks jumped 2.42 million barrels and gasoline inventories rose 3.78 million barrels.

Distillate stocks were expected to be down 900,000 barrels, while the gasoline stocks build exceeded the expected rise of 500,000 barrels, and the product builds occurred even with refinery capacity utilization dropping 1.2 percent.

The rising product stockpiles hemmed in U.S. January heating oil and RBOB gasoline futures that had edged higher ahead of the EIA data, nearing contract expirations on Monday.

Heating oil was down 1.53 cents at $3.0570 a gallon, back below the 100-day moving average at $3.0781 after reaching a session high of $3.0829.

Gasoline was down 1.08 cents at $2.8105 a gallon, with the $2.8383 session peak having failed to threaten the 100-day moving average at $2.8429.

MIDDLE EAST UNCERTAINTY

Syria's opposition leader rejected an invitation from Russia for peace talks with Syrian President Bashar al-Assad's government to end the civil war.

The West's dispute with Iran over Tehran's nuclear program continues to simmer as Iran on Friday began six days of naval drills in the Strait of Hormuz, the region's vital oil shipping route.

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Fiscal cliff woes impact:

Brent 3-mth chart analysis:

US crude 3-mth chart:

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(Additional reporting by Jessica Jaganathan in Singapore and Dmitry Zhdannikiov in London; Editing by Kenneth Barry)

((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(Reuters Messaging: robert.gibbons.reuters.com@reuters.net))

Keywords: MARKETS OIL/


© Copyright Zawya. All Rights Reserved.


UPDATE 2-Brent climbs above $111 as US leaders set to resume budget talks

* Obama to meet congressional leaders at White House at 2000 GMT

* U.S. economic data shows signs of recovery

* Coming up: EIA oil inventory data at 1600 GMT

(Updates prices)

By Jessica Jaganathan

SINGAPORE, Dec 28 (Reuters) - Brent crude climbed above $111 per barrel on Friday as U.S. lawmakers launched a last-chance round of budget talks to prevent the world's largest oil consumer from slipping back into recession.

Signs of a recovering American economy also supported U.S. crude prices, which are on track for their biggest weekly gain since mid-August.

Brent crude was up 45 cents at $111.25 per barrel by 0644 GMT, on course to post a weekly climb of about 2 percent and a full-year increase of about 3.6 percent, which would be its smallest gain in four years.

U.S. crude rose 43 cents to $91.30, set for its first yearly loss in four years, although it was on track to end the week about 3 percent higher.

"The U.S. fiscal cliff will continue to direct crude prices until it is resolved," said Natalie Rampono, a commodities analyst at ANZ in Melbourne.

U.S. President Barack Obama will meet congressional leaders from both parties at the White House later on Friday to try to revive negotiations to avoid going over the "fiscal cliff" - tax hikes and spending cuts slated to take effect on Jan.1.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Fiscal cliff woes impact:

Brent 3-mth chart analysis:

US crude 3-mth chart:

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Positive data from the U.S. on Thursday highlighting the momentum building in the economy also supported oil prices.

The number of Americans filing new claims for jobless benefits fell to a nearly 4-1/2 year low and new home sales hit their highest level since April 2010.

But capping gains in prices, U.S. consumer confidence fell more than expected in December, dropping to a four-month low, as the fiscal uncertainty pushed back against the recent optimism on the economy.

Oil also rose as Japan, the world's third largest consumer of the commodity, sped up efforts to turn around its economy.

New Prime Minister Shinzo Abe's repeated calls for "unlimited" monetary easing and policies aimed at reducing the yen's strength have bolstered expectations of a sustained period of yen weakness.

"The Japanese equity market has turned positive, providing good sentiment for global investors, with many making money and putting that money into commodity markets such as the oil market," said Tetsu Emori, a commodity fund manager at Astmax in Tokyo.

U.S. OIL INVENTORIES

The American Petroleum Institute said in a report released late on Thursday that U.S. crude inventories fell 1.2 million barrels in the week to Dec. 21, less than the expected drop.

The U.S. Energy Information Administration's oil inventory report is due on Friday at 1600 GMT. The inventory reports were delayed because of Tuesday's Christmas holiday.

Concerns about potential supply disruptions in the Middle East continued to support oil prices and were reinforced after United Arab Emirates security forces arrested a cell of UAE and Saudi Arabian citizens that the UAE said was planning attacks in both countries and other states.

The international envoy seeking a negotiated solution to Syria's 21-month-old conflict said on Thursday political change was needed to end the violence which has killed 44,000 people.

(Editing by Joseph Radford)

((Jessica.Jaganathan@thomsonreuters.com)(+65 6870 3822)(Reuters Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net))

Keywords: MARKETS OIL/


© Copyright Zawya. All Rights Reserved.


UPDATE 1-Brent climbs above $111 as US leaders set to resume budget talks

* Obama to meet congressional leaders at White House at 2000 GMT

* U.S. economic data shows signs of recovery

* Coming up: EIA oil inventory data at 1600 GMT

(Updates prices, adds quote)

By Jessica Jaganathan

SINGAPORE, Dec 28 (Reuters) - Brent crude climbed above $111 per barrel on Friday as U.S. lawmakers launched a last-chance round of budget talks to prevent the world's largest oil consumer from slipping back into recession.

Signs of a recovering American economy also supported U.S. crude prices, which are on track for their biggest weekly gain since mid-August.

Brent crude was up 47 cents to $111.27 per barrel by 0515 GMT, on course to post a weekly climb of about 2 percent and a full-year increase of about 3.6 percent, which would be its smallest gain in four years.

U.S. crude rose 43 cents to $91.30, set for its first yearly loss in four years, although it was on track to end the week about 3 percent higher.

"The U.S. fiscal cliff will continue to direct crude prices until it is resolved," said Natalie Rampono, a commodities analyst at ANZ in Melbourne.

U.S. President Barack Obama will meet congressional leaders from both parties at the White House later on Friday to try to revive negotiations to avoid going over the "fiscal cliff" - tax hikes and spending cuts slated to take effect on Jan.1.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Fiscal cliff woes impact:

Brent 3-mth chart analysis:

US crude 3-mth chart:

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Positive data from the U.S. on Thursday highlighting the momentum building in the economy also supported oil prices.

The number of Americans filing new claims for jobless benefits fell to a nearly 4-1/2 year low and new home sales hit their highest level since April 2010.

But capping gains in prices, U.S. consumer confidence fell more than expected in December, dropping to a four-month low, as the fiscal uncertainty pushed back against recent optimism about the economy.

Oil also rose as Japan, the world's third largest consumer of the commodity, sped up efforts to turn around its economy.

New Prime Minister Shinzo Abe's repeated calls for "unlimited" monetary easing and policies aimed at reducing the yen's strength have bolstered expectations of a sustained period of yen weakness.

"The Japanese equity market has turned postive, providing good sentiments for global investors, with many making money and putting the money into commodity markets such as oil market," said Tetsu Emori, a commodity fund manager at Astmax in Tokyo.

U.S. OIL INVENTORIES

The American Petroleum Institute said in a report released late on Thursday that U.S. crude inventories fell 1.2 million barrels in the week to Dec. 21, less than the expected drop.

The U.S. Energy Information Administration's oil inventory report is due on Friday at 1600 GMT. The inventory reports were delayed because of Tuesday's Christmas holiday.

Concerns about potential supply disruptions in the Middle East continued to support oil prices and were reinforced after United Arab Emirates security forces arrested a cell of UAE and Saudi Arabian citizens that the UAE said was planning attacks in both countries and other states.

The international envoy seeking a negotiated solution to Syria's 21-month-old conflict said on Thursday political change was needed to end the violence which has killed 44,000 people.

(Editing by Joseph Radford)

((Jessica.Jaganathan@thomsonreuters.com)(+65 6870 3822)(Reuters Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net))

Keywords: MARKETS OIL/


© Copyright Zawya. All Rights Reserved.


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