New York's main contract, light sweet crude for delivery in November, shed 47 cents to $89.41 a barrel and Brent North Sea crude for November delivery fell 58 cents to $111.44.

"It really is continued concerns about the global economy and the issue over Europe continues to be a bearish factor on oil markets," Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore, told AFP.

The European Stability Mechanism (ESM) was to launch with an inaugural board meeting, and European Union finance ministers were to meet amid uncertainty over Greece's tortuous debt bailout and whether Spain will need help in turn.

Last-minute disagreements over key ESM commitments have surfaced with Germany, the Netherlands and Finland arguing that the fund should not be used to help banks already bailed out before it became operational.

This represents a potential blow for the likes of Ireland, which went bust after trying to keep its lenders afloat, and for Spain which has also recapitalised some of its banks and secured 100 billion euros from its eurozone partners to do more.