* Equities, oil rise as hopes grow for a 'fiscal cliff' deal
* Product futures lead oil complex higher on Motiva problems
* Coming up: EIA oil inventory data 10:30 a.m. EST Wednesday
(Adds crude trading volume, API data, paragraphs 9, 15-19)
By Matthew Robinson
NEW YORK, Dec 18 Oil prices rose on Tuesday as
apparent progress in resolving the U.S. budget crisis eased
concerns that the world's top economy could slip into recession.
As the White House and Republicans appeared to edge closer
to a resolution to avert the "fiscal cliff" that would increase
income taxes for most Americans beginning Jan. 1, investors
poured cash into riskier asset classes such as oil and equities,
with U.S. stocks showing the biggest two-day gain in a month.
A resolution to the crisis looked closer after House of
Representatives Speaker John Boehner kept the support of his
Republican colleagues for compromises in talks with President
"Everything is keying on the 'cliff' hopes, because people
are assessing if we're closer to a deal," said Mark Waggoner,
president at Excel Futures Inc.
The budget debate and the ongoing euro zone crisis have
weighed on oil markets for months, raising worries that sluggish
fuel demand in developed economies could fall even further.
Investors have balanced consumption concerns against potential
supply disruptions because of rising unrest in the Middle East.
Gasoline and heating oil futures led the oil complex higher
on Tuesday on word Motiva Enterprises would again halt some
production on the 325,000-barrel-per-day (bpd) crude
distillation unit at its Port Arthur, Texas, refinery for more
repairs. The unit was shut down shortly after being launched
this year due to problems with pipes.
Front-month Brent crude oil prices rose $1.20 to
settle at $108.84 a barrel, briefly topping the 14-day moving
average of $108.87 a barrel.
January U.S. crude oil futures gained 73 cents to
settle at $87.93 a barrel, breaking above the 50-day moving
average of $87.64 a barrel after testing that level during
Trading volumes were light, with Brent volumes down nearly
33 percent from the 30-day moving average, and U.S. crude
volumes 24 percent off that average.
RBOB gasoline and heating oil futures rose by
1.5 and 1.3 percent, respectively, during late afternoon trade.
"Problems with the crude unit at the Motiva refinery in
Texas have helped lift gasoline and heating oil futures," said
John Kilduff, partner at Again Capital LLC in New York.
Motiva's decision to reduce production to conduct
maintenance on a "minor leak" comes one day after a small fire
broke out on the troubled unit, called VPS-5, which has spent
more time being repaired than in production since it started up
for the first time in late April.
As Brent crude prices headed toward the end of the year
close to levels where they started 2012, Ali al-Naimi, oil
minister of OPEC kingpin Saudi Arabia, said the market was well
balanced with prices above $100 a barrel. The world's largest
exporter has tried to achieve that price level by adjusting
production over the last two years.
Average Brent crude prices have been relatively stable over
the past two years, though they have at times spiked toward $120
and above as supplies from the Middle East have been disrupted
by the Arab Spring and as Western sanctions cut Iranian oil
U.S. OIL INVENTORIES
Crude futures prices had little reaction in post-settlement
trading to the American Petroleum Institute's (API) weekly
report showing crude stocks fell 4.1 million barrels last week
in the United States, much more than expected.
Gasoline stockpiles jumped 4.2 million barrels, while
distillate stockpiles fell 1.9 million barrels, the API said.
Ahead of the API data, crude oil stocks were expected to be
down 1.1 million barrels, a Reuters survey of analysts showed.
Gasoline stocks were expected to be up 1.8 million, while
distillate stocks were seen up 1.0 million barrels.
The U.S. Energy Information Administration's weekly report
will follow on Wednesday at 10:30 a.m. EST (1530 GMT).
(Reporting by Matthew Robinson and Robert Gibbons; Shadia
Nasralla and David Sheppard in London; Manash Goswami and Ramya
Venugopal in Singapore; Editing by Jim Marshall, Gunna Dickson,
David Gregorio, Phil Berlowitz and Bob Burgdorfer)