December 17, 2012 / 9:51 AM / 5 years ago

UPDATE 3-Oil edges below $108, U.S. talks eyed

* Boehner offers to accept tax hike for wealthiest Americans

* White House yet to agree to Boehner’s proposal

* Iran says oil revenue down by half (Previous SINGAPORE, updates prices)

LONDON, Dec 17 (Reuters) - Oil edged below $108 a barrel on Monday as investors remained concerned over the progress of U.S. budget deficit reduction talks, countering support from signs of a brighter economic outlook in China.

The first real movement in the talks began on Sunday, with Republican House Speaker John Boehner edging closer to President Barack Obama’s key demands on taxation. But investor concern over the pace of progress was weighing on markets, including European stocks.

Brent crude for February was down 42 cents at $107.76 a barrel by 0926 GMT, having earlier risen as high as $108.50. U.S. crude for January was down 7 cents to $86.66.

Oil had gained on Friday after surveys showed China’s manufacturing sector grew in early December and that U.S. factories were having their best month since April.

“We’re just seeing a bit of consolidation after that uptick in China data improved sentiment,” said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.

“The market is looking for the next leg-up and that would have to do (with) talks involving the U.S. fiscal cliff.”

The United States and China are the world’s largest and second-largest oil consumers, and stronger economies would boost fuel use. At present, forecasters such as the International Energy Agency expect sluggish oil demand growth in 2013.

Brent hit a 2012 high of $128 in March and is on course to end the year little changed in percentage terms as economic worries have countered price-supporting supply disruptions in the Middle East and other regions such as the North Sea.

Iran’s oil revenues have been cut in half this year from a year ago, a newspaper quoted Iran’s economic minister as saying, an admission of how deeply Western sanctions are cutting Tehran’s chief source of funds. (Reporting by Florence Tan and Alex Lawler; editing by Keiron Henderson)

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