Brent rises on US growth hopes
Brent crude rose above $108 a barrel this morning, on expectations of a revival in demand growth as the United States made progress in talks to resolve a budget crisis that threatens to dip the world's top oil consumer into recession again.
President Barack Obama made an offer to Republicans that included a major change in position on tax hikes for the wealthy, giving investors hope the weeks-long stalemate may be ending.
Asian shares tracked the overnight gains in US stocks, while base metals and other risk assets also rose on optimism over a deal before the year-end deadline.
Brent crude rose 59 cents to $108.23 a barrel by 03.33 GMT, reversing most of the previous session's losses.
US oil increased 50 cents to $87.70, gaining for a third straight day, as a key pipeline expansion may help soak up the glut of crude in the delivery hub of the futures contract.
"Oil is tracking the positive reaction in equities from New York to Asia over hopes of a resolution of the US fiscal crisis," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investment.
"The news of an expansion in the pipeline capacity in the United States may help narrow the spread between the two contracts."
In its most dramatic position change yet, the White House proposed leaving lower tax rates in place for everyone except those earning $400,000 and above, a source familiar with the talks said.
That's up from the $250,000 threshold the president has been demanding for months, but still far from Republican House of Representatives speaker John Boehner's preference of $1 million.