* White House to host budget talks with congressional
* U.S. crude stocks slip, products stocks up last week-EIA
* Coming up: CFTC positions data 3:30 p.m. EST Friday
(New throughout, updates prices, market activity, adds detail,
U.S. economic data)
By Joshua Schneyer
NEW YORK, Dec 28 Oil prices settled lower on
Friday after U.S. data showed a sharp rise in gasoline
inventories and as investors worried that U.S. budget
negotiators may not reach a deal in time to avert a fiscal
crisis that could erode oil demand.
Weekly data from the U.S. Energy Information Administration
showed U.S. gasoline stocks rose by 3.8 million barrels last
week, capping a five-week build of nearly 23 million barrels.
Demand for the motor fuel is down 2.8 percent from the same
period of 2011. The weekly build in gasoline stocks was larger
than analysts had expected, and EIA data also showed U.S. crude
stocks declined by less than expected last week.
The White House set a Friday afternoon meeting with
congressional leaders to seek a budget deal to avert looming
automatic tax hikes and spending cuts -- the so-called fiscal
cliff -- that many fear could push the world's largest economy
"All eyes are on Washington," said Addison Armstrong, senior
director for market research at Tradition Energy, in a research
U.S. crude futures fell 7 cents to settle at $90.80 a
barrel. They were up 2.4 percent on the week. Brent crude
fell 18 cents to settle at $110.62 a barrel.
U.S. equity prices slid for a fifth day, on pessimism about
whether a budget deal will be reached before year end.
Trading in crude futures was thin during a holiday season
lull, with Brent volumes around 40 percent below 30-day average
levels, and U.S. crude volumes down by around half.
Brent's $109.83 session low tested support below the 200-day
moving average at $109.94.
U.S February crude dipped below a 100-day moving average
level, after reaching the highest front-month price since
October -- $91.49 a barrel -- earlier in the session.
International benchmark Brent is still on track for a
full-year gain of about 3 percent, although U.S. crude is on
track for a 8 percent fall in 2012.
Among the factors have kept average Brent prices near
historic highs this year are potential threats to Middle East
oil supplies from turmoil in the region and signs of rebounding
Chinese and U.S. economic growth.
Separate reports on Friday showed U.S. home resales hitting
a 2-1/2-year high in November and Midwest factory activity
expanding in December.
The reports follow relatively upbeat U.S. trends in
fourth-quarter indicators for consumer spending, housing,
employment and manufacturing.
U.S. OIL INVENTORIES
U.S. crude oil inventories fell last week, but only by
586,000 barrels, in the week to Dec. 21, the Energy Information
The crude stocks drop was less than the drop of 1.9 million
barrels expected in a Reuters survey of analysts.
While crude stockpiles slipped, distillate stocks jumped
2.42 million barrels and gasoline inventories rose 3.78 million
U.S. January heating oil fell 2.75 cents to
settle at $3.0448 per gallon, while RBOB gasoline
futures fell 2.14 cents to $2.799 a gallon.
MIDDLE EAST TENSIONS
Syria's opposition leader rejected an invitation from Russia
for peace talks with Syrian President Bashar al-Assad's
government to end the civil war.
The West's dispute with Iran over Tehran's nuclear program
continues to simmer as Iran on Friday began six days of naval
drills in the Strait of Hormuz, the region's vital oil shipping
(Additional reporting by Robert Gibbons in New York, Jessica
Jaganathan in Singapore and Dmitry Zhdannikiov in London;
Editing by Kenneth Barry and David Gregorio)