New York's main contract, light sweet crude for delivery in December, shed 71 cents to $86.38 a barrel compared with Thursday's close.

Brent North Sea crude for December slid 31 cents to $107.86 a barrel in London midday trade.

Dealers were continuing to assess Sandy's impact on crude demand with supplies suffering severe disruption.

"Reports that a couple of refineries in the US will remain closed and expectations that European manufacturing will remain muted signals weak demand" for oil, IG trading group analyst Jason Hughes told AFP.

Two US refineries with a combined crude processing capacity of 308,000 barrels a day, which closed when Sandy hit on Monday, were awaiting post-storm assessments before reopening, reports said.

Their continued closure highlighted a slump in demand from the United States -- the world's largest oil consumer -- after Sandy devastated the country's east coast, with millions left without power and damage estimated at up to $50 billion.

After Sandy "come the logistical problems and then the anger as they take more time to sort out than people have patience for," PVM oil brokers analyst David Hufton said on Friday in a note to clients.

"Petrol stations out of gas, homes without power, oil terminals inundated, pipelines ruptured, harbour and river navigation blocked and refineries struggling to re-start" were all in evidence.

Oil prices on Thursday won support from improved US economic data, a surprise drop in crude supplies and a rebound in Chinese manufacturing, traders said.

Data showed an expanding manufacturing sector in China, the world's biggest energy consumer, for the first time in three months.