Oil rises above $108 on hopes for US budget deal

Brent crude oil rose above $108 a barrel on signs of progress in talks to resolve a U.S. budget crisis, easing fears the world's top oil consumer could tip into recession.

President Barack Obama made an offer to Republicans that included a major shift in position on tax hikes for the wealthy, leaving lower tax rates in place for everyone earning less than $400,000. Oil and other riskier assets rose after the U.S. president moved away from the $250,000 threshold that Democrats have been demanding for months.

Brent crude rose 60 cents to $108.24 a barrel. U.S. crude oil gained 31 cents to $87.51 a barrel. Brent crude has traded between $104 and $112 since November, pressured by concerns the United States will not reach a deal on the so-called "fiscal cliff" before the end of the year, triggering automatic tax hikes and spending cuts.
The oil minister of Saudi Arabia said the market was well balanced, with prices above $100 a barrel, a level the world's largest exporter has tried to achieve by adjusting production levels over the past two years. Average Brent crude prices have been relatively stable over the past two years, though they have at times spiked towards $120 and above as supplies from the Middle East have been disrupted by the Arab Spring and as Western sanctions have cut Iranian oil exports.