New York's main contract, light sweet crude for September delivery fell 14 cents to $99.45 a barrel and Brent North Sea crude for September delivery rose 17 cents to $118.45.

"Sovereign debt issues continue to cap oil prices, and we suspect that for the larger part of this summer macro concerns and debt-related fears are likely to dominate the fundamentals," Barclays Capital's analysts said in a report.

"In the coming days, uncertainty is thus likely to persist," they said.

US President Barack Obama and his Republican rivals remain divided on how to break an impasse on raising the country's debt ceiling to allow it to pay its bills.

Failure to agree before it runs out of money on August 2 could see the world's richest nation and largest oil user default on its debt, with potentially ruinous global results.

The face-off has sent the dollar sliding against key currencies while US stocks have also fallen.

International Monetary Fund managing director Christine Lagarde on Tuesday urged the eurozone to "quickly" implement its plan to fight a sovereign debt crisis, warning that "turbulence could easily resurface" soon.

Copyright AFP (Agence France-Presse), 2011