Oil prices decreased slightly on Wednesday, after lawmakers in the US failed to break the deadlock over the budget, which increased fears of a slump in oil demand.

Brent crude was down by 28 cents at $109.88, while US oil traded 25 cents lower at $103.24 per barrel, according to Reuters.

On Tuesday US President Barack Obama agreed to negotiate with Republican senators – if they agreed to re-open the government and raise the debt limit.

Oil prices improved slightly after the dollar recovered, which dropped in the past few days after the US Government shutdown, against major currencies.

Prices are set to increase, following political clashes in Egypt and the capture of a senior al Qaeda figure in Libya over the weekend by US forces, which increased the risk of supply disruptions in the Middle East and North Africa from key oil producing regions.

"Prices are set to increase, following political clashes in Egypt."

The American Petroleum Institute said US crude stocks increased 2.8 million barrels more than expected last week, as refineries cut their output.

Investors are waiting for the US Energy Information Administration data, which is scheduled to be released later in the day, despite the government’s shutdown.

The government agency also revised up growth in the supply of non-OPEC oil, by 50,000 bpd to 1.5 million bpd in 2014.

Image: Brent’s value dropped after lawmakers failed to end the budget deadlock. Photo courtesy of