Wall Street fell from record highs overnight, as a further slump in oil depressed shares of Chevron and Exxon Mobil, while shares of McDonald's led the decline in the Dow after a worse-than-expected drop in sales.

Brent and US crude sank to fresh five-year lows, bolstering concern that the decline will continue if it remains unchecked by a drop in Opec production.

"Without Opec intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson told Reuters.

Ole Hansen, head of commodity strategy at Saxo Bank, agreed.

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"The near-term risk is for additional long-liquidation," Hansen told Bloomberg News. "The belief is spreading that we could hit US$60 or even lower before this stabilises."

Shares of ConocoPhillips dropped, last 3.2 per cent lower, after the oil and gas producer announced a 2015 capital budget of US$13.5 billion, a decrease of about 20 per cent compared to 2014. The cut primarily reflects lower spending on major projects, several of which are nearing completion, as well as the deferral of spending on North American unconventional plays, the company said.

"We are setting our 2015 capital budget at a level that we believe is prudent given the current environment," Ryan Lance, chief executive officer of ConocoPhillips, said in a statement.

In afternoon trading in New York, the Dow Jones Industrial Average slid 0.32 per cent, the Standard & Poor's 500 Index fell 0.39 per cent, while the Nasdaq Composite Index declined 0.55 per cent.

Slides in shares of McDonald's, Chevron and Exxon Mobil, down 3.8 per cent, 3.4 per cent, and 2.2 per cent respectively, led the Dow lower.

McDonald's posted a larger-than-expected decline in US sales in November due to strong competition and warned that fourth-quarter results would be hurt by supplier troubles in China and a stronger greenback.

"It's a squeeze that will probably continue for the foreseeable future," Will Slabaugh, an analyst at Stephens in Little Rock, Arkansas, told Bloomberg News. "It puts more caution out there that the changes they're trying to make aren't dramatic enough or aren't moving fast enough - or both."

Shares of Merck rose, last up 0.2 per cent, after the company said it would buy Cubist Pharmaceuticals for US$8.4 billion plus about US$1.1 billion in net debt.

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"Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines," Kenneth Frazier, Merck's chief executive officer, said in a statement. "Combining this expertise with Merck's strong capabilities and global reach will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance."

In Europe, the Stoxx 600 Index ended the session with a 0.7 per cent decline from the previous close, as did Germany's DAX Index. The UK's FTSE 100 Index dropped 1.1 per cent, while France's CAC 40 Index fell 1 per cent.

Germany's DAX fell from a record high after a report showed the country's industrial production increased less than expected.