November 6, 2012 / 5:08 AM / 5 years ago

Brent steadies under $108; US elections, Greece in focus

An engineer conducts routine checks on oil tanks at a refinery in Wuhan, Hubei province November 27, 2008. REUTERS/Stringer

SINGAPORE (Reuters) - Brent oil traded in a tight range below $108 per barrel on Tuesday, caught between uncertainty ahead of the U.S. elections and renewed worries about Greece and the euro zone crisis, which could delay global economic recovery and hurt oil demand.

President Barack Obama and Republican challenger Mitt Romney were essentially deadlocked on the election eve, polls show, raising concerns of a cliffhanger delaying the outcome and roiling markets, as it did during the extended presidential battle in 2000.

Adding to the worries was news that a deal to keep near-bankrupt Greece afloat may not be reached at a euro zone finance minister’s meeting next week.

Front month Brent futures were up 11 cents at $107.84 per barrel by 0339 GMT, trading in a tight 37-cent range so far in the session. Brent rallied nearly 2 percent in the previous session, backed by strength in U.S. gasoline futures.

U.S. crude slipped 4 cents to $85.61 per barrel.

“Trading volumes have been thin as the focus is on the U.S. elections at the moment,” said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.

The absence of a decisive win and a clear Congress majority raises the chances of messy negotiations over the “fiscal cliff” - nearly $600 billion worth of spending cuts and tax increases that risks pushing the U.S. economy into deep recession, analysts say.

Investors are also monitoring the aftermath of superstorm Sandy on the east coast and the Greek situation, Ker said.

“In Europe, there are concerns Greece may not get the funding and the argument that Greece could quit the euro may come back to haunt the risk sentiment of investors,” he said.

EUROPE WORRIES

Euro zone debt concerns raised their heads once more as hopes of a fresh funding deal for Greece at a November 12 meeting of ministers were dashed.

Lawmakers were yet to find a formula that would make Greek debt sustainable, an European Union source said.

Athens also needs to push through spending cuts and tax measures worth $17.5 billion, along with a raft of economic reforms that will satisfy EU and IMF lenders.

A 48-hour strike against the proposed measures begins on Tuesday, a day ahead of a key parliamentary vote on labour reforms.

Markets are also eyeing data from the American Petroleum Institute on Tuesday for clues on the impact of superstorm Sandy on oil inventory in the top consumer.

U.S. crude inventories are forecast to have risen by 0.9 million barrels in the week to November 2 while product stocks fell after disruptions to pipelines, imports and refineries, a preliminary Reuters poll of analysts showed on Monday.

Oil prices may get some support as worries about unrest in the Middle East, a key source of crude oil for the world, were revived after a suicide bomb attack in Syria on Monday.

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