Oil prices fell this afternoon, pressured by a combination of lingering concerns about Europe’s debt problems and reports that talks on a debt reduction plan in the US have stalled with just two days to go before the deadline.

Yields on Spanish bonds rose today even though the outcome of yesterday’s elections met expectations with the Popular Party capturing a comfortable majority and Mariano Rajoy replacing Jose Luis Rodriguez Zapatero as prime minister.

The governments of two other troubled euro zone members Italy and Greece fell earlier this month amid lack of progress in their efforts to tackle the debt crisis.

Across the Atlantic, reports suggested that a bipartisan commission is set to fail to agree on a plan to reduce America’s deficit by US$1.2 trillion by the Wednesday deadline with traders fearing that this may lead to further downgrades of the US credit rating and potentially trigger a double dip recession, reducing energy demand.

In other news, secretary general of the Organization of Petroleum Exporting Countries (OPEC) Abdullah al-Badri said on Sunday that Libyan oil output will reach one million barrels at the end of the year.

As Libyan oil returns to the markets, other OPEC members should trim production to support prices, said al-Badri.

The organization, which is responsible for 30 percent of global oil supplies, is due to meet next month.

US light, sweet crude for January delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell US$1.57 to US$96.1/barrel in morning trade in New York.

January Brent crude slipped 87 to US$106.63/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Xtract Energy (LON:XTR), up 14.5 percent at 2.18 pence at midday

Petro Matad (LON:MATD), up 9.5 percent at 23.25 pence

Max Petroleum (LON:MXP), up 6 percent at 13.25 pence

Roxi Petroleum (LON:RXP), up 4.5 percent at 4.7 pence

The top fallers were:

Falkland Oil & Gas (LON:FOGL), down 9 percent at 56.55 pence at midday

Kea Petroleum (LON:KEA), down 8 percent at 4.25 pence

Lansdowne Oil & Gas (LON:LOGP), down 8 percent at 36.15 pence

Desire Petroleum (LON:DES), down 7.5 percent at 23.12 pence

Leni Gas & Oil (LON:LGO), down 7 percent at 0.859 pence