New York's main contract, light sweet crude for delivery in February shed 13 cents to $88.54 in the afternoon and Brent North Sea crude for February fell 29 cents to $108.73.
Traders are growing concerned at the political bickering in Washington over a new budget to replace a package of deep spending cuts and huge tax hikes due to take affect next week, said Jason Hughes, head of premium client management for IG Markets Singapore.
"We've still got concerns over where we stand in the fiscal cliff... that remains a concern that keeps traders cautious," he told AFP.
In recent weeks Democratic and Republican leaders have rejected offers from the other side and broke for the Christmas holiday on Saturday blaming each other for failing to find a deal.
If the painful package kicks in, most economists say the economy will tip into recession, which would have a knock-on effect around the world.