Brent holds above $111 on Greek deal hopes, Egypt clashes

Jessica Jaganathan
Reuters Middle East

* Eurogroup due to try to hammer out deal later on Monday

* Egyptian violence erupts, stoking supply concerns

* U.S. White House and Congress set to resume negotiations

this week

SINGAPORE, Nov 26 (Reuters) - Brent crude held above $111 a

barrel on Monday as hopes Greece can avoid a near-term

bankruptcy brightened the outlook for oil demand from Europe,

while violent protests in Egypt reignited supply concerns.

The Eurogroup is due to try to hammer out a deal later in

the day to get international lenders to release emergency aid to

Greece before its next debt repayments.

Germany Chancellor Angela Merkel said she was confident a

deal could be reached, while the French finance minister said an

agreement was close.

Brent crude slipped 26 cents to $111.12 a barrel by 0322

GMT, while U.S. crude fell 30 cents to $87.98.

"Markets could be a little bit cautious today on macro

related political events happening this week. On Greece debt

deal, depending on the outcome, oil (prices) could go either

way," said Natalie Rampono, a commodity strategist at ANZ.

"Investors are still uncertain of the situation in the Gaza

Strip ... The main driver for oil prices the next few weeks,

though, will be the U.S. fiscal cliff and whether markets will

pre-empt positive or negative results."

The White House and Congress are set to resume negotiations

this week to avoid a series of automatic tax hikes and spending

cuts worth $600 billion set for January, which investors fear

could tip the world's biggest oil consumer into recession.

Lawmakers in both the Democratic and Republican parties have

been trying to convince the public - and financial markets -

that they are willing to compromise and can reach a deal before

the end of the year.

"After last week's solid gains, equity markets are getting

to a level where investors will need tangible evidence of good

outcomes on Greece, the fiscal cliff and economic growth to push

prices higher," said Ric Spooner, chief market analyst at CMC

Markets in a note on Monday.


In Egypt, more than 500 people have been injured in protests

sparked by President Mohamed Mursi's decision to grant himself

sweeping new powers, supporting oil prices which had eased last

week with the Israel-Gaza truce.

Egypt's stock market plunged on Sunday in its first day open

since Mursi issued a decree late on Thursday temporarily

widening his powers and shielding his decisions from judicial

review, drawing accusations he was behaving like a new dictator.

Mursi will meet senior judges on Monday to try to ease the

crisis. Egypt's highest judicial authority hinted at compromise

to avert a further escalation, though Mursi's opponents want

nothing less than the complete cancellation of a decree they see

as a danger to democracy.


Apart from hopes for a Greek deal later in the day, oil

prices also drew support from promising German data.

German business sentiment surprised with a rise in November,

breaking a six-month run of declines. The closely watched

Munich-based Ifo think tank said its business climate index rose

to 101.4, beating forecasts.

However, a regional Spanish election which favoured the

separatists parties raised concerns about the negative impact to

the Spanish economy and its fiscal conditions, and in turn, oil


Catalonia accounts for 20 percent of the economy and

provides the most tax revenue to the central government.

Catalan President Artur Mas, who has implemented unpopular

spending cuts in an economic crisis, had called an early

election to test support for his new drive for independence for

Catalonia, a wealthy region in northeastern Spain.

Voters handed almost two thirds of the 135-seat local

parliament to four different Catalan separatist parties that all

want to hold a referendum on secession from


Oil prices were also supported after U.S. equity markets got

a boost from hopes for strong consumer buying on "Black Friday",

the start of the holiday shopping season.

(Editing by Himani Sarkar)

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