Crude oil prices declined and hovered above $85 a barrel in Asia Tuesday as demand reduced in the U.S. because of Superstorm Sandy.

U.S. crude for December delivery declined 0.35 percent or 30cents to $85.24 a barrel during the Asian trading hours. Brent crude oil futures for the December delivery fell 0.43 percent or 47 cents to $108.97 a barrel on the ICE futures exchange in London.

Oil demand in the world’s largest oil consuming nation declined after Hurricane Sandy unleashed its fury on the densely populated East Coast Monday, shutting down transportation, forcing evacuations in flood-prone areas and interrupting the presidential campaign.

"People can't go out, they can't use, they can't consume. Crude inventories are running pretty high, 11-12 percent above a 5-year average. The only area of concern is if the refineries are going to be knocked out for a period of time but this would be a rare event as operators were prepared for the storm," Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm, told Reuters.

Sandy, one of the biggest storms ever to hit the U.S., forced the closure of two-thirds of refineries along the U.S. East Coast. Over one million people have been given evacuation orders along America's east coast, while more than two million have been left without power.

Heavy rains and gusty winds are running their course, leading to sporadic power outages and flooding in New York area.  According to disaster modeling company Eqecat, the economic losses due to the storm are going to be between $10 billion to $20 billion.

Around 12,000 flights have been cancelled in preparation for the storm and a raft of services and institutions have been suspended, including the U.S. stock exchange and public transportation systems in New York, Boston and Washington.

On Monday, light sweet crude for the December delivery fell 0.9 percent or 74 cents and settled at $85.54 a barrel on the New York Mercantile Exchange while Brent crude for the December delivery slipped 11 cents or 0.1 percent and settled at $109.44 a barrel.