Oil prices rose in Asia Tuesday, with hopes rising of a US deal to avert the fiscal cliff after a meeting between President Barack Obama and top Republican lawmaker John Boehner, analysts said.
New York's main contract, light sweet crude for delivery in January rose 37 cents to $87.58 a barrel and Brent North Sea crude for February delivery advanced 63 cents to $108.25.
News that Democrats and Republicans were making progress on a deal to avoid tax hikes and spending cuts from kicking in at the beginning of January provided a boost, IG Markets said in a report. If the measures are allowed to take effect analysts warn the US economy will likely tip into recession.
"A glimmer of hope of developments in the fiscal cliff negotiations meant... markets traded on a firmer note," the report said.
"We're sure both sides will see sense to reach a compromise just in time to prevent the final nail being hammered in to the coffin."
Hopes were lifted after Obama and Boehner, the speaker of the House of Representatives, met on Monday for 45 minutes at the White House. They were joined by Treasury Secretary Timothy Geithner.
"The president believes that the parameters of a potential agreement are clear," White House spokesman Jay Carney told reporters after the meeting.
The Washington Post also reported Monday that signs have emerged that the two sides had narrowed their differences and could be close to shaking hands on an agreement that would see $1 trillion in new tax revenues and $1 trillion in spending cuts over the next decade.