Oil up in Asia as traders eye US fiscal cliff talks

SINGAPORE - Oil prices were up in post-Christmas Asian trade Wednesday as traders warily eyed the soon-to-resume US budget talks on a deal to avert the fiscal cliff, analysts said.

New York's main contract, light sweet crude for delivery in February rose 39 cents (S$0.47) to $89.00 a barrel in the afternoon and Brent North Sea crude for February gained 50 cents to $109.30.

US budget discussions were once again the "main focus of attention", said Jason Hughes, head of premium client management for IG Markets Singapore.

Lawmakers are set to return to the negotiating table after Christmas holidays in a last ditch effort to reach a deal to avert the so-called cliff, a series of steep tax hikes and spending cuts due to take effect in January.

Experts warn that going over the cliff could plunge the world's biggest economy back into recession.

"All eyes (are on) the US after stable but quiet holiday trading... for a decision that will tip markets one way or the other," Hughes told AFP.

More than $600 billion in scheduled tax increases and across-the-board spending cuts are set to kick in early next year, leaving Democratic and Republican leaders with only a few days to reach consensus.

The two sides on Saturday broke for the Christmas holiday blaming each other for stonewalling the crucial deal.