Oil prices up in Asian trade

Oil prices were higher in Asian trade on Wednesday as the euro strengthened against the dollar but sentiment was weighed by uncertainty over untangling a gridlock in US budget talks. The euro extended gains as markets cheered the European Union’s extension of Greece’s deficit targets and concerns over the US economy drove investors toward the single currency. A stronger euro makes dollar-priced oil cheaper, boosting demand and leading to higher prices. New York’s main contract, light sweet crude for delivery in January was up 40 cents to $88.90 a barrel in afternoon trade and Brent North Sea crude for January climbed 23 cents to $110.07. Analysts said however that sentiment was weighed down by the budget impasse in Washington. They fear that the US economy — a key engine for global growth — will lurch back into recession if no deal is reached between the Republicans and Democrats to avert the year-end “fiscal cliff” of significant tax increases and spending cuts. “We continue to think that more pressure is needed for both parties to reach a solution. That is why we do not expect to get better visibility on the shape of a potential deal until much closer to the end of the year,” Dutch bank ABN Amro said in a market note.