Oil prices eased on Monday in choppy trading on concerns that slower economic growth in China and the debt crisis in Europe will curb demand for petroleum, while the potential for Middle East turmoil to disrupt supplies limited losses.
Brent crude especially received support as Turkey and Syria exchanged artillery fire for a sixth day, keeping in focus the threat of a wider conflict in the region.
Brent prices moved higher in post-settlement trading as the seesaw price trajectory continued.
Crude futures encountered pressure when the World Bank cut its economic growth forecasts for East Asia and the Pacific region and said there was a risk the slowdown in China, the global No. 2 oil consumer, could be deeper and more prolonged than expected by many analysts.
China's economic growth and demand for petroleum have been key supports for oil prices since global energy demand was hit by recession after the financial crisis in 2008.
The euro retreated from a two-week high against the dollar and yen as uncertainty about Spain persisted after euro zone ministers said the country did not yet need a bailout.
The dollar was broadly stronger and a stronger U.S. currency can put pressure on dollar-denominated commodities like oil.
The concerns about Asia weighed on global and U.S. equities.
"The situation between Turkey and Syria and some German export data, that was unexpectedly supportive, helped pull prices off lows hit because of concerns about China's slowing and Europe's debt crisis," said Phil Flynn, analyst at Price Futures Group in Chicago.
Brent November crude edged down 20 cents to settle at $111.82 a barrel, recovering after falling to a session low of $110.54. Prices reached $112.24 during the session, putting prices above the 200-day moving average of $112.15, a technical level closely monitored by chart-watching traders.
U.S. November crude fell a second straight session, dropping 55 cents to settle at $89.33 a barrel, leaving prices back below the 100-day moving average of $89.88, which also was Friday's settlement.
Brent's premium to U.S. crude increased to $22.49, and reached $22.92 intraday on Monday. Middle East conflicts and delays in the October loading of North Sea Forties cargoes have helped push Brent's premium to its highest since October 2011.
Total crude trading volume was light, with Brent turnover 16 percent below its 30-day average and U.S. dealings 27 percent below their 30-day average.
U.S. RBOB gasoline fell 2 percent, dropping nearly 6 cents to settle at $2.8931 a gallon. The trading range from $2.8890 and $2.9729 kept gasoline between the 100-day moving average at $2.8780 and the 200-day moving average of $2.9729.
U.S. heating oil, the benchmark distillate futures contract, eased 1.16 cents to settle at $3.1443 a gallon.
Monday's Columbus Day holiday for U.S. federal workers will delay weekly oil inventory reports this week. The American Petroleum Institute will release its data at 4:30 p.m. EDT (2030 GMT) on Wednesday, while U.S. Energy Information Administration data will arrive at 11 a.m. EDT on Thursday.
MIDDLE EAST TURMOIL
Turkish President Abdullah Gul said the "worst-case scenarios" were now playing out in Syria. Gul said Turkey would to do everything necessary to protect itself, while its army fired back for a sixth day after a shell fired from Syria flew over the border.
Syrian forces advanced into the rebel-held Khalidiya district in the central city of Homs for the first time in months, rebels in the neighborhood said. Forces fighting rebels seeking to topple President Bashar al-Assad have been bombarding 12 districts of the besieged Homs for four days.
"The ongoing shelling of Turkey by Syria is also fuelling concerns about the conflict in Syria spreading to the neighboring country," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
"If this were to happen, oil production in the North of Iraq would be at risk, since the oil is transported to the West via pipelines through Turkey," he said.
Iran's dispute with Israel and the West over Tehran's nuclear program also continues to limit oil price losses.
Iran on Monday derided Israel's air defenses as feeble, citing a drone incursion into Israeli airspace, but Tehran did not say it had sent the aircraft shot down by the Israelis at the weekend.
Iran also accused Israel and others of masterminding what it said was a cyber attack on communication networks on Iranian offshore oil and gas platforms in the past few weeks. (Additional reporting by Alice Baghdjian and Christopher Johnson in London and Florence Tan and Manolo Serapio Jr in Singapore; Editing by Bob Burgdorfer and Marguerita Choy)