* U.S. lawmakers offer little confidence on budget talks
* Egypt tensions support oil prices
* Oil price rally on Middle East tension may hurt econ
* Coming Up: U.S. EIA stocks report; 1530 GMT
By Luke Pachymuthu
SINGAPORE, Nov 28 Brent crude steadied below
$110 per barrel on Wednesday, not far from a one-week low hit in
the previous session as investors nervously eyed talks to head
off a looming fiscal disaster in the United States, the world's
top oil consumer.
Supply worries due to tensions in Egypt, however, cushioned
prices that were locked in a tight range -- swinging from a drop
of 10 cents to a rise of 9 cents so far in the session.
Brent crude edged down 1 cent to $109.86 per barrel
by 0229 GMT, after dropping to $109.31 on Tuesday -- its lowest
since Nov. 20. U.S. crude was down 5 cents at $87.13 per
barrel, extending its slide into a third straight session.
Concerns over whether U.S. lawmakers were putting the
world's largest economy at risk of a recession by failing to
make headway in their budget talks are weighing on financial
markets, analysts said.
"The global economy, China, Europe, needs the U.S. economy
to grow, and that is why the pressure to get this deal done is
greater than before," said Carl Larry, a derivatives broker at
the Houston-based Atlas Commodities. "The global economy can't
afford for America to slip back into a recession."
The U.S. Congress pushed toward a compromise on Tuesday on a
deal to avert the "fiscal cliff" of tax increases and spending
cuts due to take effect next year, but an agreement still
Further depressing the outlook for oil demand, the
Organization for Economic Cooperation and Development cut its
global growth forecasts, warning that the debt crisis in the
recession-riddled euro zone is the greatest threat to the world
"Another reason why we are seeing some swing in prices is
because trading volumes are looking light, we aren't quite back
to levels prior to the holidays," Larry said.
MIDDLE EAST TENSIONS
The escalating political crisis in Egypt that has triggered
worries about potential disruption to supplies in the Middle
East, however, continued to prop up oil prices.
Tens of thousands of Egyptians rallied on Tuesday against
President Mohamed Mursi in one of the biggest outpourings of
protest since Hosni Mubarak's overthrow, accusing the Islamist
leader of seeking to impose a new era of
"When you see the protests on the streets in Greece the
markets drop, but when you see the thousands of people gather in
the streets of Egypt, the markets get nervous and jump," Larry
said. "Protests in Egypt and tensions in the Middle East send
prices upwards and make it even more difficult for the global
economy to sustain a recovery."
Investors are now eyeing data on U.S. crude stockpiles from
the U.S. Energy Information Administration later in the day for
hints on demand from the key consumer.
Data released by the American Petroleum Institute late
Tuesday showed crude stocks rose by 2 million barrels for the
week ended Nov. 23. Gasoline stocks rose 2.3 million barrels and
distillate stocks rose 268,000 barrels, the API said.
Crude stocks were expected to be up only 300,000 barrels and
gasoline up 900,000 barrels, a Reuters survey showed.
(Editing by Himani Sarkar)