House Speaker John Boehner charged on Thursday that the White House seemed willing to "slow-walk our economy right up to - and over - the fiscal cliff," underscoring a lack of progress in talks between Congress and the White House to avert tax increases and spending cuts in 2013 that may risk a recession.

The comments came after government data earlier on Thursday showed U.S. initial jobless claims fell to a near four-year low last week and retail sales rebounded in November, indicating a U.S. economic recovery may be picking up.

"The U.S. data took our minds off the fiscal cliff for a few moments, but the possibility that going over the cliff might cause a recession continues to limit crude prices, along with high inventories and relatively warm temperatures in the U.S.," said Phil Flynn, an analyst at Price Futures Group in Chicago.

European Brent crude for January delivery, whose contract expires on Friday, fell $1.59 to settle at $107.91 a barrel. U.S. crude futures for January fell 88 cents to settle at $85.89.

Crude prices fell as U.S. equity prices also dipped and as the U.S. dollar gained against a basket of foreign currencies, which can make dollar-denominated commodities such as oil more expensive for foreign currency holders.

The oil price fall came after commodities and equities values had risen on Wednesday following the U.S. Federal Reserve's announcement of plans for more monetary stimulus.

Members of the Organization of the Oil Exporting Countries (OPEC), which pumps more than a third of the world's oil, met in Vienna on Wednesday and agreed to keep their output quotas of 30 million barrels per day unchanged.

But tension in the Middle East continued to fuel worries about the potential for oil supply disruptions, limiting any oil price slide.

Iran ended a round of talks with the United Nation's nuclear watchdog on Thursday and reported they had made progress and would continue in January. The U.N. agency did not immediately comment on the talks. Tensions have run high over Iran's nuclear program, with international sanctions cutting into Iran's oil exports.

U.S. crude was headed for a modest weekly gain, but futures are on track to end the year down around 12 percent from the 2011 close of $98.83. Brent crude has also posted a gain in the week so far, and stands around $1 a barrel higher than its $107 price at the end of last year.

U.S. heating oil and RBOB gasoline futures also slipped on Thursday, on news that a shut-in crude unit at Motiva's 600,000 barrel per day Port Arthur, Texas, refinery could be restarted quickly after a small fire affected it earlier in the week.

OPEC STANDS PAT

OPEC agreed on Wednesday to retain its output quotas at the same levels it has kept since 2011 despite the prospect of rising inventories in the first half of next year.

"It became clear once again that the cartel is relatively unwilling to act, especially when prices are high," Commerzbank commodity analysts said in a note.

The target is higher than is required for OPEC to meet demand next year, some market observers say, but the excess supply has cushioned the impact on prices from a drop in Iranian oil exports due to sanctions.