The price of oil fluctuated near $88 a barrel on Friday amid uncertainty about progress in U.S. budget talks meant to avoid automatic tax increases and budget cuts.
By early afternoon in Europe, benchmark crude for January delivery was down 27 cents to $87.80 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to close at $88.07 on the Nymex on Thursday.
U.S. lawmakers are trying to hammer out a deal to avoid a series of automatic tax increases and spending cuts that could drag the U.S. economy into recession if they go into effect.
Markets have been volatile ahead of the Jan. 1 deadline for an agreement to be reached to avoid the so-called fiscal cliff.
"No significant progress has been made in the U.S. budgetary dispute, which has led to profit-taking," analysts from Commerzbank wrote in a report.
Analysts do not expect oil demand to rise strongly in coming months as the world's major economies struggle to maintain growth. Supplies, meanwhile, remain ample.
In London, Brent crude, which is used to price international varieties of oil, was down 13 cents to $110.76 per barrel on the ICE Futures Exchange.
Other futures on the New York Mercantile Exchange:
— Heating oil lost 0.22 cent to $3.0547 a gallon
— Natural gas fell 0.9 cent to $3.639 per 1,000 cubic feet
— Wholesale gasoline was down 1.07 cents to $2.7227 a gallon.
Pamela Sampson in Bangkok contributed to this report.
- Budget, Tax & Economy
- New York Mercantile Exchange