Crude prices fell on Tuesday as investors remained concerned about the "fiscal cliff" talks in Washington, D.C..
Markets were pressured by demand concerns after the Institute of Supply Management said on Monday that the U.S. manufacturing sector shrank in November to its weakest level since July 2009.
To add to the bearish tone, investors worried about the looming "fiscal cliff", which economists warned could drag the world's largest oil consumer's economy back to recession.
Negotiations between the White House and Republicans in Congress were still going on without any deal on the horizon, while the deadline is approaching. A series of expiring tax cuts and sweeping spending reductions will take effect on Jan.1, 2013, if Congress won't act.
On the supplies front, data from the American Petroleum Institute (API) will be released later Tuesday, while the U.S. Energy Information Administration (EIA) will release its weekly report on Wednesday.
In the report, the EIA is expected to gauge a fall of 300,000 barrels in crude-oil stockpiles for last week, while demand of refineries keeps rising.
Trading volume were light, with the U.S. crude about 28 percent lower than the 30-day moving average as investors moved to the sidelines.
Light, sweet crude for January delivery lost 59 cents, or 0.66 percent, to settle at 88.50 dollars a barrel on the New York Mercantile Exchange. Brent crude for January delivery slipped 1.08 dollars, or 0.97 percent, to finish at 109.84 dollars a barrel.