President Barack Obama and Republican lawmakers are locked in a battle over measures to tide over the so-called "fiscal cliff", a program of spending cuts and tax increases that could push the world's top oil consumer back into recession.
Such a development will worsen the outlook for oil demand, given subdued services data from China, weak US manufacturing data from earlier this week and the debt crisis in Europe that could plunge their economies deeper into recession.
"There are a lot of push-pull factors in the oil markets at the moment; with the fiscal crisis in the US and the weak manufacturing data this week, there is certainly some negativity there," said Ben le Brun, market analyst at OptionsXpress in Sydney.
Front month Brent futures traded 16 cents higher at $110 at 0250 GMT, after losing nearly 1 percent in the previous session.
Prices could hover above support at $109.44 before dropping to $108.55, according to Reuters analyst Wang Tao. US crude added 24 cents to $88.74.
Still, political and civil unrest in Egypt and Syria and an ongoing dispute between Iran and the United States threaten to disrupt exports from the Middle East, triggering worries about supply.
"Anything to do with the Middle East will underpin prices, but the big concern at the moment is the continuing tensions with Iran," added le Brun.