Brent oil prices fell on Tuesday after the International Energy Agency cut its global crude demand forecasts, while sentiment was also hit by worries over the looming US "fiscal cliff" and the ongoing eurozone debt crisis.
In late afternoon London deals, Brent North Sea crude for delivery in December fell 86 cents to $108.21 a barrel.
New York's main contract, light sweet crude for December traded in negative territory for most of the day, but recovered to stand at $85.61 per barrel, up five cents from Monday's closing level.
"Oil prices on both the Brent and US measure have slid lower today after the IEA downgraded its forecasts for demand growth in the face of the continuing deterioration being seen in economic data seen across Europe," said CMC Markets analyst Michael Hewson.
"The agency also cited an assumption that US inventories would continue to remain high due to the disruption caused by the recent bad weather in the US."
The IEA -- which represents oil consuming countries -- predicted that global demand will have increased by 670,000 barrels per day (bpd) in 2012 to 89.6 mbpd. This was 60,000 bpd less than assumed a month ago.
For 2013, the Paris-based IEA also slashed its demand forecast by 100,000 bpd to a rise of 830,000 bpd to reach 90.4 mbpd, in its latest monthly report.
The agency said that the downward revisions were mainly owing to sluggish economies in developed countries and the knock-on effects of Hurricane Sandy which wrought havoc on the US east coast two weeks ago.
Sandy was expected to have slashed US demand by 230,000 barrels per day in October, as people curtailed travel and product deliveries were impeded.
Meanwhile, investors also fretted over the so-called fiscal cliff in the United States.
Rival US politicians must reach a deal to avoid the imposition of deep spending cuts and huge tax hikes on January 1 and which observers say would tip the country back into recession -- and dent energy demand in the world's top oil consuming nation.
There were also European debt fears as Eurogroup head Jean-Claude Juncker said Monday that Greece had made progress on its debt bailout targets but regional finance ministers will have to meet again on November 20 to clear the way for its next aid tranche.
Despite recent losses, oil prices remain at elevated levels not far from $110 per barrel in London.
OPEC Secretary-General Abdullah El-Badri, speaking at a conference in London on Tuesday, blamed speculators for stubbornly high prices.
"There is no shortage of oil anywhere in the world, stocks are very high (and) OPEC has strong spare capacities," El-Badri told delegates at the Oil & Money industry event.
"The market is very well supplied. There is no doubt about it, so I don't understand why we have these high prices. Speculation is the problem.
"Speculation is part of the market, you can't eliminate it. It's not in our interest to see world economy damaged by high oil prices," he added.
The 12-nation Organization of Petroleum Exporting Countries, which supplies about one third of global oil, will hold its next regular production meeting in Vienna on December 12.