* New Japan PM makes beating deflation top priority
* U.S. lawmakers revive fiscal talks, deadline looms
* Coming up: U.S. crude inventory data at 2130 GMT
By Ramya Venugopal
SINGAPORE, Dec 27 Brent crude held near $111 per
barrel on Thursday as jittery investors stayed on the sidelines
with a deadline to avert a U.S. fiscal crisis approaching, while
hopes the new Japanese government's policies will spur demand
U.S. President Barack Obama and the Republicans resumed
talks on Wednesday over the so-called fiscal cliff - tax hikes
and spending cuts slated to take effect next week that could
push the economy back into recession.
"There is no easy way to resolve the U.S. fiscal cliff, but
there should be a compromise at some point and that's what the
market is looking for," said Tetsu Emori, a commodity fund
manager at Astmax in Tokyo.
Front-month Brent futures slipped 18 cents to
$110.89 per barrel at 0310 GMT, giving up some of the previous
session's 2 percent gain. U.S. crude dropped from a
nine-week high reached on Wednesday, shedding 15 cents to $90.83
Oil futures rose in early Asian trade, taking a cue from
Japanese stocks, which were at an 18-month high after the
country's new prime minister said beating deflation in the
world's No. 3 oil consumer and taming a strong yen were his top
"There are hopes that the caressive fiscal policies will
help Japan get out of deflation and, as it is an importer of
commodities, that's a positive for oil markets."
The government will pursue bold monetary policy, flexible
fiscal policy and a growth strategy to encourage private
investment, Prime Minister Shinzo Abe said on Wednesday
The White House and Republicans are still far apart, as
hopes for legislation to prevent the U.S. economy from tumbling
off the fiscal cliff switch to the Senate.
Democrats control a majority in that chamber but still need
some support from Republicans across the aisle for a likely
attempt to raise taxes on the wealthy.
Obama will try to revive budget crisis talks - which stalled
last week - when he returns to Washington on Thursday after
cutting short his Christmas holiday in Hawaii.
"While markets have vacillated between optimism and
pessimism over the prospects for a compromise, we expect a deal
only at the last minute, with lots of decisions delayed into the
New Year and austerity of roughly 2 percent of GDP," Bank of
America-Merril Lynch analysts said in a report last week.
Oil futures may rise in the first quarter of 2013 with the
global economy showing early signs of a pick-up, and on
expectations that the fiscal crisis will be resolved.
Encouraging economic data from China, aggressive action by
the European Central Bank to help out its crisis ridden
economies and quantitative easing by the U.S. Federal Reserve
together brighten the outlook for oil in the near-term.
U.S. crude could rise to $100 per barrel and Brent may test
$120 by the end of March, said Emori.
Also supporting prices are expectations that U.S. crude
stockpiles may have decreased last week as refiners kept
inventory low for year-end tax purposes.
Crude stocks may have dropped by 1.9 million barrels in the
week ended Dec 21, a Reuters poll showed on Wednesday.
Inventory data from the American Petroleum Institute will be
released on Thursday, while numbers from the Energy Information
Administration will be out on Friday, a day later than usual,
because of the Christmas holiday on Tuesday.
(Reporting by Ramya Venugopal; Editing by Joseph Radford)