SINGAPORE  - Crude prices fell in Asia Tuesday after data showed US manufacturing activity contracted last month, while dealers grow concerned at the lack of progress on a deal to avert the fiscal cliff.

New York’s main contract, light sweet crude for delivery in January fell 27 cents to $88.82 a barrel in the afternoon and Brent North Sea crude for January shed 26 cents to $110.66.

“On the energy markets, oil continued to edge down on the disappointing” US data, IG Markets said in a report.

“Last night traders suffered the double whammy of weak US economic data combined with another impasse in budget talks as Democrats rejected the latest Republican proposal.”

The US Institute for Supply Management said Monday that manufacturing activity in the world’s largest economy and oil consumer contracted in November following two straight months of gains.

The reading was also the lowest level of activity since July 2009.

Adding to concerns about the United States, Democrats and Republicans blamed each other over their proposals on action to close the huge US deficit.

If a deal is not reached to address the huge tax hikes and spending cuts that are due to come into effect on January 1 the world’s biggest economy will likely tip into recession next year.

The White House late Monday laid into a proposal tabled by the Republicans as not meeting “the test of balance”.

The Democrats days before submitted a proposal that Republicans derided as “ridiculous”.