Preheat oven to 175 degrees C (350 degrees F). Grease cookie tins.
In a large bowl, cream together 1/2 cup butter and caster sugar until light and fluffy. Beat in the eggs one at a time, then stir in 1 teaspoon vanilla and 1 teaspoon almond extract, 1/4 cup milk and oil. Combine the flour and baking powder, stir into the wet mixture. Roll dough into 2.5cm balls. On a lightly floured surface, roll the balls out into ropes about 13cm long. Tie into loose knots and place cookies 2.5cm apart onto the prepared cookie tins.
Bake for 5 minutes on the bottom shelf and 5 minutes on the top shelf of the preheated oven, until the bottoms of the cookies are golden brown. When cookies are cool, dip them into the icing.
To make the icing, cream together the icing sugar, 1/2 cup butter, and 1 teaspoon vanilla and 1 teaspoon almond extracts. Beat in 3 tablespoons milk, one tablespoon at a time, then stir in the food coloring if desired.