U.S. crude ends lower awaiting budget talks, posts weekly gain

NEW YORK | Fri Dec 28, 2012 2:47pm EST

NEW YORK Dec 28 (Reuters) - U.S. crude futures dipped in thin, choppy trading on Friday, feeling pressure after data showed that fuel stockpiles rose sharply and crude stocks fell less than expected last week while awaiting fresh U.S. budget talks that might avert looming tax hikes and spending cuts.

U.S February crude slipped 7 cents, or 0.08 percent, to settle at $90.80 a barrel, having traded from $90.32 to $91.49.

For the week, U.S. crude rose $2.14, or 2.4 percent. (Reporting by Robert Gibbons)

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CORRECTED-UPDATE 2-Brent slips towards $109 as U.S. fiscal talks stall

(Corrects third paragraph to say U.S. crude is set to rise, not slide, for the week.)

* Boehner abandons fiscal cliff plan as Republicans balk

* Stokes worries about demand from world's biggest oil consumer

* Brent's target at $111.45 aborted -technicals

* Coming Up: U.S. durable goods orders Weekly; 1330 GMT

By Florence Tan and Manash Goswami

SINGAPORE, Dec 21 (Reuters) - Brent crude fell towards $109 a barrel on Friday after talks in the United States to reach an agreement to resolve a budget crisis stalled, reviving worries about demand in the world's biggest oil consumer.

Republican lawmakers failed to back an effort to head off $600 billion worth of indiscriminate tax hikes and spending cuts that threaten to push the U.S. economy into recession next year. The dramatic twist, coming after growing optimism just a few days earlier of an agreement, weighed on Asian shares, the euro and base metals.

Brent crude slipped 57 cents to $109.63 a barrel by 0439 GMT, declining for a second day. The contract is set to rise for a second week. The stalemate had a larger impact on U.S. oil, which fell as low as $88.93 and traded $1 lower at $89.13. It is set to rise nearly 3 percent this week.

"The latest news that came out just a few hours ago has caused the broader markets to sell," said Victor Shum, managing director at IHS Purvin & Gertz. "There's a view that it's a setback for talks between the Republicans and the White House."

Only 11 days are left to prevent automatic tax hikes and spending cuts, referred to as the fiscal cliff, and House of Representatives Speaker John Boehner faced an embarrassing setback when he failed to unite his lawmakers as many conservative Republicans are opposed to tax hikes on the richest wage-earning Americans.

A bullish target at $111.45 per barrel has been temporarily aborted for Brent as it was unable to break resistance at $110.50, while U.S. oil is expected to hover around resistance at $90.30 or retrace moderately to $89, according to Reuters technical analyst Wang Tao.

But the overall outlook for oil demand growth looks set to improve for 2013 on the back of signs of a recovery in the U.S. economy, said Ric Spooner, chief market analyst at CMC Markets.

DEMAND OUTLOOK

The U.S. economy grew faster than previously thought, at a 3.1 percent annual rate in the third quarter, the Commerce Department said. It was the fastest pace since late 2011 and more than double the second quarter's 1.3 percent rate.

Other data showed factory activity in the mid-Atlantic region picked up this month, while home resales in November were the best in three years, indicating the economy retained some vigor early in the fourth quarter.

"The numbers provide a sound spring board for an improved growth outlook for the United States in 2013," Spooner said.

Spooner expects Brent to trade between $100 and $120 a barrel next year and the U.S. contract in a $80-$95 range.

A key factor pushing prices out of the range in the upper end is an escalation in the geopolitical crisis in the Middle East. Brent rose to a high of $128 a barrel and has stayed above $100 through most of the year on supply disruption worries as tensions over Iran's controversial nuclear programme escalated.

But an uncertain global economic outlook and Europe's long drawn out sovereign debt crisis have kept gains in check.

"Any increase in threat or physical damage to infrastructure will lead to spike in prices. Although we have surplus capacity, there isn't so much of a surplus to absorb a severe disruption," Spooner said. "The progress in resolving Europe's debt crisis will be a source of concern and weigh on the market." (Reporting by Florence Tan and Manash Goswami; Editing by Chris Gallagher)

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UPDATE 3-Brent slips below $110 as U.S. fiscal talks stall

* Boehner abandons fiscal cliff plan as Republicans balk

* Stokes worries about demand from world's biggest oil consumer

* Brent's target at $111.45 aborted -technicals

* Coming Up: U.S. durable goods orders, weekly; 1330 GMT (Updates prices)

By Florence Tan and Manash Goswami

SINGAPORE, Dec 21 (Reuters) - Brent crude fell below $110 a barrel on Friday after talks in the United States to avert a budget crisis stalled, reviving worries about demand in the world's biggest oil consumer.

Republican lawmakers failed to back an effort to head off $600 billion worth of indiscriminate tax hikes and spending cuts that threaten to push the U.S. economy into recession next year. The dramatic twist, coming after growing optimism just a few days earlier of an agreement, weighed on Asian shares, the euro and base metals.

Brent crude slipped 54 cents to $109.66 a barrel by 0809 GMT, declining for a second straight day, but on track for a second weekly rise.

The U.S. stalemate had a larger impact on NYMEX crude for February delivery, which dropped to as low as $88.93 and was trading down 91 cents at $89.22. But prices are on track for an almost 3 percent rise this week, its biggest such gain since mid-August, led by a rally earlier in the week on hopes of a U.S. fiscal deal at the time.

"The latest news that came out just a few hours ago has caused the broader markets to sell," said Victor Shum, managing director at IHS Purvin & Gertz, referring to U.S. House of Representatives Speaker John Boehner's failure to round up Republican support for his bill.

"There's a view that it's a setback for talks between the Republicans and the White House."

Only 11 days are left to prevent automatic tax hikes and spending cuts, referred to as the fiscal cliff.

A bullish target at $111.45 per barrel has been temporarily aborted for Brent as it was unable to break resistance at $110.50, while U.S. oil is expected to hover around resistance at $90.30 or retrace moderately to $89, according to Reuters technical analyst Wang Tao.

But the overall outlook for oil demand growth looks set to improve for 2013 on signs of a recovery in the U.S. economy, said Ric Spooner, chief market analyst at CMC Markets.

DEMAND OUTLOOK

The U.S. economy grew faster than previously thought, at a 3.1 percent annual rate in the third quarter, the Commerce Department said. It was the fastest pace since late 2011 and more than double the second quarter's 1.3 percent rate.

Other data showed factory activity in the mid-Atlantic region picked up this month, while home resales in November were the best in three years, indicating the economy retained some vigour early in the fourth quarter.

"The numbers provide a sound spring board for an improved growth outlook for the United States in 2013," Spooner said.

Spooner expects Brent to trade between $100 and $120 a barrel next year and the U.S. contract in a $80-$95 range.

A key factor pushing prices out of the range in the upper end is an escalation in the geopolitical crisis in the Middle East. Brent rose to a high of $128 a barrel and has stayed above $100 through most of the year on supply disruption worries as tensions over Iran's controversial nuclear programme escalated.

But an uncertain global economic outlook and Europe's festering sovereign debt crisis have kept gains in check.

"Any increase in threat or physical damage to infrastructure will lead to spike in prices. Although we have surplus capacity, there isn't so much of a surplus to absorb a severe disruption," Spooner said.

"The progress in resolving Europe's debt crisis will be a source of concern and weigh on the market." (Editing by Himani Sarkar)

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Brent slips to $110, stalled US fiscal talks dent demand outlook

* U.S. crude and distillate stocks fall, capping oil price loss

* Promising German data supports sentiment

By Jessica Jaganathan

SINGAPORE, Dec 20 (Reuters) - Brent crude slipped on Thursday to trade near $110 a barrel as investors took profits from recent gains after talks to avert a U.S. fiscal crisis stalled, stoking worries about demand from the world's biggest oil consumer.

As a year-end deadline nears, U.S. President Barack Obama and House of Representatives Speaker John Boehner remained locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.

Significant progress seemed to have been made earlier this week with both Obama and Boehner offering substantial concessions, but talks turned sour again with Obama accusing opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational".

"Negotiations are (not progressing) which is probably why we're seeing a sell-off today and the risk sentiment coming off," said Natalie Rampono, a commodities analyst at ANZ in Melbourne. "The markets are being directed by sentiment from the U.S. fiscal cliff talks and so that will have the biggest influence on prices at the moment."

Brent crude slipped 35 cents to $110.01 a barrel by 0340 GMT, after settling $1.52 higher in the previous session which was the biggest one-day gain since Nov. 19.

U.S. oil fell 40 cents to $89.58.

While investors still believe the United States will be able to avert a fiscal crisis, oil prices and other riskier assets will remain under pressure as the deadline comes closer with no signs of a deal yet.

However, a patch of promising data from Germany and the United States kept a floor under prices.

Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.

Also adding to positive sentiment was data showing U.S. homebuilding permits touched their highest level in nearly 4-1/2 years in November.

Investors are now eyeing weekly U.S. data on jobless claims due later on Thursday for further clues on the country's economic health.

U.S. STOCKS DRAWDOWN SUPPORTS

Oil prices also found early support from a drop in U.S. crude oil and distillate stocks.

Crude stocks fell by 964,000 barrels to 371.65 million barrels, compared with an average analyst forecast for a 1.1 million barrel drawdown in a Reuters poll. Crude imports fell 101,000 barrels per day (bpd) to 8.36 million bpd.

Distillates, which include diesel and heating oil, fell 1.09 million barrels to 116.97 million barrels, versus analyst expectations for a 1 million-barrel build.

"Oil prices could get a little bit of support ... in the slight pick up in heating oil demand with the drop in distillate inventory being greater than expectations ... So if product prices increase, that could sometimes influence oil market sentiment," Rampono said.

Oil prices could also be underpinned by a little-noticed provision in U.S. sanctions against Iran beginning in February that is likely to trap payments abroad for its oil exports running into billions of dollars.

The provision could halt most of the flow of petrodollars to Iran, given that the value of its oil exports is far higher than what it imports from its biggest customers - China, South Korea, India and Japan.

Sanctions on financial transactions with Iran have already made it difficult for buyers to pay for oil from the OPEC producer, triggering supply worries and supporting oil prices. (Editing by Himani Sarkar)

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UPDATE 2-Brent below $110, stalled US fiscal talks cloud outlook

* U.S. crude and distillate stocks fall, capping oil price loss

* Promising German data supports sentiment (Updates prices)

By Jessica Jaganathan

SINGAPORE, Dec 20 (Reuters) - Brent crude slipped on Thursday to trade below $110 a barrel as investors took profits after recent gains as talks to avert a U.S. fiscal crisis stalled, stoking worries about demand in the world's biggest oil consumer.

As a year-end deadline nears, U.S. President Barack Obama and House of Representatives Speaker John Boehner remained locked in intense bargaining over a deal to avoid the so-called "fiscal cliff" of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.

Significant progress seemed to have been made earlier this week with both Obama and Boehner offering substantial concessions, but talks turned sour again with Obama accusing opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational".

"Negotiations are (not progressing) which is probably why we're seeing a sell-off today and the risk sentiment coming off," said Natalie Rampono, a commodities analyst at ANZ in Melbourne. "The markets are being directed by sentiment from the U.S. fiscal cliff talks and so that will have the biggest influence on prices at the moment."

Brent crude slipped 49 cents to $109.87 a barrel by 0702 GMT, after settling $1.52 higher in the previous session which was the biggest one-day gain since Nov. 19.

U.S. oil fell 45 cents to $89.53.

While investors still believe the United States will be able to avert a fiscal crisis, oil prices and other riskier assets will remain under pressure as the deadline comes closer with no signs of a deal yet.

However, a patch of promising data from Germany and the United States kept a floor under prices.

Morale at German businesses climbed in December as their confidence in the outlook rose at its fastest rate in 2-1/2 years, boosting hopes Europe's largest economy will bounce back quickly after a weak end to 2012.

Also adding to positive sentiment was data showing U.S. homebuilding permits touched their highest level in nearly 4-1/2 years in November.

Investors are now eyeing weekly U.S. data on jobless claims due later on Thursday for further clues on the country's economic health.

U.S. STOCKS DRAWDOWN SUPPORTS

Oil prices also found early support from a drop in U.S. crude oil and distillate stocks.

Crude stocks fell by 964,000 barrels to 371.65 million barrels, compared with an average analyst forecast for a 1.1 million barrel drawdown in a Reuters poll. Crude imports fell 101,000 barrels per day (bpd) to 8.36 million bpd.

Distillates, which include diesel and heating oil, fell 1.09 million barrels to 116.97 million barrels, versus analyst expectations for a 1 million-barrel build.

"Oil prices could get a little bit of support ... in the slight pick up in heating oil demand with the drop in distillate inventory being greater than expectations ... So if product prices increase, that could sometimes influence oil market sentiment," Rampono said.

Oil prices could also be underpinned by a little-noticed provision in U.S. sanctions against Iran beginning in February that is likely to trap payments abroad for its oil exports running into billions of dollars.

The provision could halt most of the flow of petrodollars to Iran, given that the value of its oil exports is far higher than what it imports from its biggest customers - China, South Korea, India and Japan.

Sanctions on financial transactions with Iran have already made it difficult for buyers to pay for oil from the OPEC producer, triggering supply worries and supporting oil prices. (Editing by Himani Sarkar and Ed Davies)

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UPDATE 1-Australia's Whitehaven has had talks with China's Shenhua

* Shenhua has not offered to sell assets, Whitehaven says

* Shenhua has not made any takeover proposal

* Whitehaven sees benefits in combining assets with Shenhua

* Whitehaven shares jump as much as 4 pct (Adds Whitehaven comment)

MELBOURNE, Dec 19 (Reuters) - China's Shenhua Group has held talks with Australia's Whitehaven Coal Ltd about a potential corporate or asset deal, but has not made any proposals to sell its assets to Whitehaven nor made a takeover offer, Whitehaven said on Wednesday.

Whitehaven made the comment after a newspaper said Shenhua, China's biggest coal producer, had recently discussed taking an equity stake in Whitehaven in return for Shenhua's Watermark coal assets in New South Wales.

Whitehaven said it routinely has talks with other coal companies about opportunities, including corporate and asset transactions.

"Whitehaven has had such discussions at various times with Shenhua, because of the obvious potential synergies between the assets of each company in the Gunnedah Basin," it said in a statement in response to the report in the Australian Financial Review.

"Whitehaven has had no proposals from Shenhua to sell its assets to Whitehaven, nor has there been any proposal from Shenhua to acquire Whitehaven," it said.

Whitehaven has been under pressure after its biggest shareholder, electrician-turned-mining magnate Nathan Tinkler, scrapped a $5.5 billion bid to take Whitehaven private earlier this year.

Tinkler offered A$5.20 a share for Whitehaven in July. The stock has since sunk to A$3.21, valuing the company at A$3.3 billion ($3.5 billion), weighed down by weak prices for thermal coal and worries that Tinkler may be forced to sell his 19.4 percent stake in the company as he struggles to pay off debts.

Shenhua expressed interest in bidding for Whitehaven nearly two years ago, but that auction was called off last year after Whitehaven failed to secure an acceptable offer.

The Australian miner then went on to acquire Tinkler's Aston Resources for $2.2 billion earlier this year, taking over the prized Maules Creek coal project.

Whitehaven shares rose as much as 4 percent on Wednesday after the company confirmed it has held talks with Shenhua. Its shares touched a high of A$3.34 and last traded at A$3.29. ($1 = 0.9487 Australian dollars) (Reporting by Sonali Paul; Editing by Chris Gallagher)

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