Brent North Sea crude for February sank $1.46 to $110.98 per barrel in midday trade in London.
New York's main contract, light sweet crude for delivery in February, shed $1.20 to $91.72 a barrel.
"Prices were ... driven down following the move by the US Federal Reserve to signal a possible end to fiscal stimulus this year, which has raised concern that the economic recovery may falter," said Inenco energy analyst Gary Hornby.
Fed policymakers were divided over how long the central bank should continue asset purchases to support the economy, the minutes of their last meeting showed Thursday.
The Federal Open Market Committee, at a December meeting, approved open-ended quantitative easing, but some thought the purchases should continue until the end of 2013 while others thought they should end sooner, according to the minutes.
The FOMC agreed at the meeting to launch a new, open-ended $45 billion a month program of buying longer-term Treasury securities to replace the bond-swap Operation Twist program that was to expire at year-end.
The panel also continued its QE program for mortgage-backed securities at a pace of $40 billion per month, as well as other measures aimed at pushing down long-term interest rates to encourage investment.
The minutes of the December 11-12 meeting highlighted the climate of uncertainty the central bankers saw in the economy and about the effectiveness of their policies.
Later on Friday, meanwhile, attention would focus on non-farm payrolls figures in the United States. The data is slated for publication at 1330 GMT.
"Crude oil prices extended losses and retreated sharply on Friday, ahead of the release of the US non-farm payroll data," added Sucden analyst Myrto Sokou.
"In addition, it seems that the US fiscal cliff euphoria has already faded, prompting investors to some profit-taking as risk appetite is limited."
Crude futures had hit an 11-week high on Wednesday after the US Congress backed an agreement that averted across-the-board tax hikes and automatic spending cuts which could have tipped the economy into recession.
However, while the tax problem was addressed, another row is expected as an agreement must be struck within two months to deal with billions of dollars of spending cuts as well as to raise the country's debt ceiling.
Those concerns were compounded Thursday by the Fed minutes showing a growing bias towards some policy tightening this year, with some members looking to end the bank's asset purchases during 2013 and others by the end of the year.
The United States is the world's biggest oil consuming nation and its energy consumption patterns can influence global prices.