(Updates throughout, changes dateline, previous SINGAPORE)
* U.S. Republicans withdraw support for budget agreement
* Coming Up: U.S. durable goods orders, weekly; 1330 GMT
By Christopher Johnson
LONDON, Dec 21 Brent crude oil fell below $110 a
barrel on Friday after talks in the United States to avert a
budget crisis stalled, reviving worries about demand i n the
world's biggest oil consumer.
Republican lawmakers failed to back an effort to head off
$600 billion worth of tax rises and across-the-board spending
cuts that could push the U.S. economy into recession next year.
The move depressed stock markets, the euro and commodities
but boosted the dollar.
Brent crude slipped 75 cents to $109.45 per barrel
by 0930 GMT. Brent was on track for a second weekly rise and was
up just under 2 percent for 2012 as a whole, having averaged
around $111.70, not far above its 2011 average of $110.91.
The U.S. budget stalemate had a larger impact on U.S. crude
, which dropped to a low of $88.93 and was trading down
$1.05 at $89.08 by 0930.
"The latest news that came out just a few hours ago has
caused the broader markets to sell," said Victor Shum, managing
director at IHS Purvin & Gertz, referring to U.S. House of
Representatives Speaker John Boehner's failure to round up
Republican support for his bill.
"There's a view that it's a setback for talks between the
Republicans and the White House."
Only 11 days are left to prevent automatic tax hikes and
spending cuts, referred to as the 'fiscal cliff'.
Analysts are more upbeat on the prospects for the oil market
in the New Year, following Chinese data showing higher demand
and on expectations of slightly faster global economic growth.
World oil demand growth looks set to rise in 2013 due to a
recovery in the U.S. economy, according to many forecasters.
The U.S. economy grew faster than previously thought, at a
3.1 percent annual rate in the third quarter, the Commerce
Department said. It was the fastest pace since late 2011 and
more than double the second quarter's 1.3 percent rate.
Other data showed factory activity in the U.S. mid-Atlantic
region picked up this month, while home resales in November were
the best in three years, indicating the economy retained some
vigour early in the fourth quarter.
"The numbers provide a sound spring board for an improved
growth outlook for the United States in 2013," said Ric Spooner,
chief market analyst at CMC Markets.
(Additional reporting by Florence Tan and Manash Goswami in
Singapore; editing by William Hardy)