Oil prices rebounded on Thursday on hopes the United States could reach a deal to avoid the "fiscal cliff" of tax rises and spending cuts that would likely tip the world's biggest crude consumer into recession.
New York's main contract, West Texas Intermediate (WTI) for delivery in January, climbed $1.10 to $87.59 a barrel.
Brent North Sea crude for January jumped $1.41 to $110.92 a barrel in London midday deals.
"Prices have been given a slight boost amid hopes that a solution may have been found to the US budgetary dispute," said Commerzbank analyst Carsten Fritsch.
Oil prices had fallen on Wednesday as traders worried about the budget negotiations but sentiment turned positive after US President Barack Obama and Republican House Speaker John Boehner voiced confidence that agreement would be reached.
"Encouraging comments on tackling the fiscal cliff by the end of the year gave Wall Street a welcome lift," said IG analyst Justin Harper.
However the Singapore-based analyst added that financial markets would remain volatile until the Republicans and Democrats came up with a deal before the January 1 cut-off date, when the $600 billion (462 billion euros) worth of measures come into effect.
"Comments are likely to continue from US lawmakers, both optimistic and pessimistic, on progress," Harper said.
"Each time sentiment is likely to turn sharply, leading to a volatile period for US equities, and possibly global markets, until politicians sign off on a new budget plan for 2013."
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