Supply worries due to tensions in Egypt, however, cushioned prices that were locked in a tight range -- swinging from a drop of 10 cents to a rise of 9 cents so far in the session.

Brent crude edged down 1 cent to $109.86 per barrel by 0229 GMT, after dropping to $109.31 on Tuesday -- its lowest since Nov. 20. US crude was down 5 cents at $87.13 per barrel, extending its slide into a third straight session.

Concerns over whether US lawmakers were putting the world's largest economy at risk of a recession by failing to make headway in their budget talks are weighing on financial markets, analysts said.

"The global economy, China, Europe, needs the US economy to grow, and that is why the pressure to get this deal done is greater than before," said Carl Larry, a derivatives broker at the Houston-based Atlas Commodities. "The global economy can't afford for America to slip back into a recession."

The US Congress pushed toward a compromise on Tuesday on a deal to avert the "fiscal cliff" of tax increases and spending cuts due to take effect next year, but an agreement still appeared elusive.

Further depressing the outlook for oil demand, the Organization for Economic Cooperation and Development cut its global growth forecasts, warning that the debt crisis in the recession-riddled euro zone is the greatest threat to the world economy.

"Another reason why we are seeing some swing in prices is because trading volumes are looking light, we aren't quite back to levels prior to the holidays," Larry said.