European Council President Herman van Rompuy tweeted during the night that negotiations with the 27 heads of member states would continue at 6.30am on Friday.
He is attempting to get leaders to agree on a budget for the period 2014 to 2020. Sources have said he is aiming at agreeing on about €957 billion ($1.28 trillion).
Sweden, along with the UK, the Netherlands and Finland, have been pushing for major EU budget cuts, while several countries in southern and eastern Europe want to maintain or increase spending.
Swedish Prime Minister Fredrik Reinfeldt welcomed news that the news budget would likely be around €960 billion.
“That’s a substantially lower figure that the starting point, which was around €100 billion higher. This is good,” he said upon arriving at the talks on Thursday night.
“We’re going to succeed. The question is whether it will happen today, tomorrow, or whether it will require another occasion.”
The TT news agency reports that one-on-one talks between the president and country leaders have been ongoing, with reports that prime ministers have been trying to forge alliances on the side of the negotiation table.
Any budget agreement would have to be approved by the European parliament.
“The further the proposal gets from what the Commission proposed, the likelihood of parliament approving it goes down,” said parliamentary speaker Martin Shultz.
The original proposal from the Commission was €1 trillion.
According to diplomatic sources, Sweden will be offered a €160 billion discount on its yearly membership fee.
Some observers claim it is likely that Sweden, Austria and the Netherlands, which all receive discounts, will be hashing out the details because they have to divvy up the discount between them.
Neighbouring Denmark stands to get its first EU discount.
Sverige, Nederländerna och Österrike har ännu inte godkänt förslaget.