The price of oil rose above $85 a barrel Thursday, recovering only a fraction of the previous day's losses, which were the biggest of the year.
By early afternoon in Europe, benchmark crude for December delivery was up 86 cents to $85.30 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $4.27, or 5 percent, to finish at $84.44 per barrel in New York. It was the lowest price since July 10.
The U.S. election that kept President Barack Obama in the White House also left Congress divided. That spooked investors because it could make it difficult for Washington to agree on a budget that would avoid the deep spending cuts and tax hikes — the so-called 'fiscal cliff' — set to automatically take place in January.
Concerns over the global economy also persist, with growth slowing particularly in Asia and Europe.
Meanwhile, oil markets are still recovering from the impact of Superstorm Sandy.
Traders say the U.S. has ample oil stocks because of increased output and reduced demand in the aftermath of the storm. The government reported another increase in supply last week, reminding traders that crude inventories are nearly 11 percent above year-ago levels while demand remains anemic.
In London, Brent crude was up 76 cents to $107.58 a barrel on the ICE Futures exchange.
In other energy futures trading in New York:
— Wholesale gasoline rose 2.41 cents to $2.613 per gallon.
— Heating oil added 1.62 cents to $2.9783 per gallon.
— Natural gas dropped 5.1 cents to $3.527 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.