Brent crude oil futures fell to their lowest in 12 days on on fears of a looming budget crisis in the United States, the world's top oil consumer.
Brent crude fell $0.85 to $109 after recovering from $108.44 earlier in the session. US crude shed $0.90 to trade at $86.28 per barrel.
A failure by US lawmakers to make progress in their budget talks - raising the prospect of automatic spending cuts and tax hikes - has pushed sensitive assets like oil and equities lower.
The mounting political crisis in Egypt and escalating violence in Syria has led to worries about potential disruption to supplies in the Middle East, helping prevent a larger decline in oil prices.
Hundreds of demonstrators were in Cairo's Tahrir Square for a sixth day on Wednesday, demanding President Mohamed Mursi rescind a decree they say gives him excessive powers, while two of Egypt's top courts stopped work in protest.
US crude oil inventories dropped slightly last week versus expectations for a build and gasoline stocks rose sharply as refineries increased processing rates, data from the US Energy Information Administration showed.
US crude oil inventories fell 347,000 barrels in the week to Nov. 23, to 374.12 million barrels.
US gasoline stockpiles rose a sharp 3.9 million barrels to 204.3 million barrels, compared with expectations for a smaller 900,0000 barrel build.
