Oil prices eased Thursday as the market fretted about the US fiscal cliff crisis that threatens to throw the world's biggest crude oil consumer back into recession.
New York's main contract, West Texas Intermediate (WTI) for January delivery, shed 88 cents from Wednesday to settle at $85.89 a barrel.
In London trade, Brent North Sea crude for January dropped $1.59 to close at $107.91.
With just 18 days left before the January 1 kick-off of drastic US tax increases and spending cuts known as the fiscal cliff, President Barack Obama and Republican lawmakers remained at odds over a compromise to avoid the cliff.
"The president wants to pretend that spending isn't the problem -- that's why we don't have an agreement," said John Boehner, Speaker of the House of Representatives.
"Sentiment was hurt" after Boehner's comments "and as the S&P put a negative outlook on the UK's triple-A rating," said Fawad Razaqzada of GFT Markets.
The Federal Reserve's announcement Wednesday of more stimulus to prop up the economy failed to stimulate markets in the way many had hoped, he said.
"Investors are simply left confused by the Fed's latest policy and when there is confusion in the market, it normally leads to some risk aversion which is what happened today."