Oil in New York dropped for the first time in three days as European policy makers met to discuss aid for Greece and Japan's economy shrank.

Futures fell as much as 0.9 per cent as euro-area finance ministers gathered in Brussels after Greek lawmakers passed a 2013 budget needed to unlock bailout funds. Japan's economy contracted last quarter at an annual rate of 3.5 per cent, the most since the earthquake and tsunami in early 2011.

"As long as there is no resolution to the Greek crisis markets will remain under pressure," said John Kilduff, a partner at Again Capital LLC, a New York-based energy hedge fund. "The 3.5 per cent contraction of the Japanese economy speaks to demand concern. This will have an impact on other Asian economies and we will see an impact of on consumption."

Crude oil for December delivery fell 62 cents, or 0.7 per cent, to $US85.45 a barrel at 12:14 p.m. on the New York Mercantile Exchange. Prices are down 13 per cent this year.

Brent oil for December settlement declined 47 cents, or 0.4 per cent, to $US108.93 a barrel on the London-based ICE Futures Europe exchange.

The finance ministers probably won't approve 31.5 billion euros ($US40 billion) in fresh loans to Greece and will agree to prevent the country from defaulting 5 billion euros of bills that mature on Nov. 16, a European official said last week. The European sovereign debt crisis began in Greece three years ago and has spread to Ireland, Portugal, Italy, Spain and Cyprus.

'Large Risks'

The so-called troika that oversees Greece's bailouts said it sees "very large risks" to the Greek program, according to a draft report obtained by Bloomberg. The troika comprises the European Commission, the European Central Bank and the International Monetary Fund.

The decline in Japan's gross domestic product followed a revised 0.3 per cent gain the previous quarter, the Cabinet Office said in Tokyo. A drop of 3.4 per cent was the median estimate in a Bloomberg News survey of 23 economists.

Saudi Arabian Oil Minister Ali al-Naimi said yesterday that the oil market is "very balanced." Consumers are also happy with prices, he told reporters in Abu Dhabi yesterday, adding that the kingdom produced 9.7 million barrels a day in October.

Refineries Down

Crude rose earlier, following gasoline, amid concern that East Coast supplies will slip because of Hurricane Sandy. Gasoline gained as much as 1.8 per cent before falling back.

Phillips 66's Bayway refinery in New Jersey may restart Nov. 19, the company said Nov. 5. Hess Corp. said last week that no schedule is set for the return of its Port Reading plant. The two plants combined can produce 308,000 barrels a day.

In the New York City metropolitan area, where fuel rationing was introduced to ease long lines, 72 per cent of gas stations were able to sell gasoline as of Nov. 9, the Energy Department said yesterday.

"The gasoline situation in the New York area is slowly improving," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

China's net crude imports rose to 5.52 million barrels a day in October, the highest level since May, the General Administration of Customs said Nov. 10 in Beijing. Industrial production was up 9.6 per cent in October from a year earlier, the National Bureau of Statistics said Nov. 9.

"We're treading water here," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. "The Chinese oil demand numbers over the weekend are providing support while the Japanese economic data are putting downward pressure in the market. We should test last week's low of $US84.05 this week."

BLOOMBERG