* Asian shares inch higher, track overnight gains in US
* Hopes revive on deal between Obama, Republicans on US
* Brent to rebound to $109.02 -technicals
By Manash Goswami
SINGAPORE, Dec 18 Brent crude rose above $108 a
barrel on Tuesday, 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
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 U.S. 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
0333 GMT, reversing most of the previous session's losses. U.S.
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 U.S. 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
"The market will view any advance in talks as positive for
confidence which has been battered by the daily flow of
political fighting," Ben Taylor, sales trader at CMC Markets
said in a report. "Regardless of what is decided, the market is
looking for a decision and any compromise will help provide a
clearer picture for the future."
A resolution to the so-called "fiscal cliff" may help
support oil prices, which have been capped, with Brent trading
between a high of $112 and a low of $104 since November, in part
because of an uncertain demand outlook.
The possible end to the stalemate comes as data points to a
revival in demand in China, renewing investor optimism over two
of the world's top oil consumers.
"We have also seen an improvement coming from China. Their
refinery output is increasing and that is leading to higher
imports," Emori said. "That is also supporting prices."
Brent is expected to rebound to $109.02 per barrel, as it
did not break a support at $107.54, while U.S. oil may break a
resistance at $87.77 and rise into a range of $88.28 to $88.37,
Reuters technical analyst Wang Tao said.
Enterprise Products Partners LP and partner Enbridge
Inc plan to expand the Seaway pipeline to transport
850,000 barrels a day of crude between Oklahoma and southern
Texas during the first quarter of 2014.
Seaway, a 150,000 barrel per day line that was reversed
earlier this year to ship crude 500 miles southward from
Cushing, Oklahoma, to Houston, Texas, will be expanded to run
400,000 bpd as of next month.
(Reporting by Manash Goswami; Editing by Clarence Fernandez)