Oil falls on "fiscal cliff" fears (2)

However, oil obtained support from the Energy Information Administration's weekly inventories report, which showed U.S. crude stocks surprisingly fell 300,000 barrels in the week ended Nov. 23 due to a strong draw of refinery demand.

Traders were also closely watching the situation in the Middle East. Egypt, an important power in the region, was facing violent protests over President Mohamed Mursi for the sixth day. The fragile cease-fire between Israel and Hamas and continuing unrest in Syria kept posing threat to oil supplies, which limited oil losses.

Light, sweet crude for January delivery lost 69 cents, or 0.79 percent, to settle at 86.49 dollars a barrel on the New York Mercantile Exchange. Brent crude for January delivery dropped 36 cents, or 0.33 percent, to finish at 109.51 dollars a barrel.

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