Crude oil prices fell on Monday as traders' hopes of a last-minute compromise deal between US politicians to avert the "fiscal cliff" faded, analysts said.
Offshore oil platform rigs in Port Fourchon, Louisiana, June 14, 2010. Crude oil prices have fallen as traders' hopes of a last-minute compromise deal between US politicians to avert the "fiscal cliff" fade, analysts say.
New York's main contract, light sweet crude for delivery in February, shed 28 cent to $90.52 a barrel.
Brent North Sea crude for February slipped 73 cents to $109.89 a barrel in London morning trade.
Political deadlock preventing a bipartisan deal hours before the fiscal cliff of sharp tax hikes and spending cuts is due to kick in was depressing markets, said analyst Yang Weiming.
"All the news is talking about the stalemate on the fiscal cliff discussion... expectations are not so high on a grand resolution," the premium client manager for IG Markets Singapore told AFP.
US leaders were still locked in negotiations that appeared to be making little headway on a deal to avert the punishing package of government spending cuts and tax hikes that are due to take effect on January 1.
Senate Republican minority leader Mitch McConnell warned that, despite through-the-night talks, negotiators were still a long way from success, with Democrats not responding to a "good faith offer" his party had made.
Senate Democratic leader Harry Reid agreed talks were at a standstill, raising the prospect that Americans will ring in the New Year with no deal to avert the fiscal cliff which could send the US -- the world's largest economy and oil consumer -- into recession.
Looking ahead, an already predicted drop in oil demand growth next year risks weighing on high crude prices despite Middle East unrest.
Benchmark Brent crude oil futures have traded around $110 a barrel for the past two months, benefiting major crude producers like Saudi Arabia and Iran while putting a strain on main consumers the United States and China.
Despite geopolitical tensions across the oil-rich Middle East, amid violence in Syria, recent Israel-Gaza unrest and a Western ban on Iranian crude exports, analysts said prices could drop in 2013 should a world economic recovery falter.
Brent prices hit a 2012-high of $128.40 a barrel on March 1, before slumping in late June to $88.49 -- its lowest point of the year.
Prices had spiked in March to a near four-year high on escalating tensions over Iran's alleged nuclear weapons programme, the eurozone debt crisis and otherwise positive economic data, according to analysts.
Crude futures meanwhile slumped in June to 18-month lows owing to weak demand expectations.