Brent crude slipped Monday as signs of economic weakness in Asia and a looming recession in the debt-saddled euro zone tempered more optimistic U.S. manufacturing data.
The international benchmark came under early pressure from data showing factory activity in No. 2 oil consumer China contracted, while euro zone manufacturing suffered the worst quarter for three years in the three months to September.
In a day of light trading, U.S. crude futures rose slightly on data showing U.S. manufacturing expanded in September, shaking off three months of weakness as new orders and employment picked up.
U.S. crude settled in positive territory, but Brent reversed its earlier gains to settle lower.
"This is a market that has plenty of excuses for moving higher," energy analyst Tim Evans of Citi Futures Perspective said, pointing to the U.S. Federal Reserve's latest quantitative easing and geopolitical tensions in the Middle East.
"But without stronger physical demand for petroleum, higher price levels will not be sustainable."
Oil markets have been weighing unrest in the Middle East and the potential for supply disruptions as well as maintenance-related delays in North Sea crude shipments against weak fuel demand and economic data in recent weeks.
Front-month Brent crude traded down 20 cents to settle at $112.19 a barrel, off highs of $113.37 a barrel struck earlier in the session.
U.S. crude rose 29 cents to settle at $92.48 a barrel, having hit $93.33 earlier.
Trading volumes were light, with Brent down 27 percent and U.S. crude down nearly 33 percent after settling.
Brent's premium to U.S. crude fell to $19.78 a barrel, after nearing $21.00 during intraday trade on Friday, its highest level since mid-August.
Jefferies Bache Senior Vice President Andrew Lebow said the higher than expected U.S. manufacturing numbers coupled with a "lackluster" day for Europe helped narrow the premium.
Brent gained 14.9 percent in the third quarter, following a drop of 20 percent in the second quarter, while U.S. crude rose 8.5 percent in the quarter after slumping 17.5 percent in April-June.
Traders were also keeping an eye on further delays in shipments of North Sea Forties crude, one of the most important grades underpinning the Brent contract, which have helped support futures prices in recent weeks.
A seventh cargo of the crude was delayed for October, due to lower output levels, traders said, adding to concerns about supplies. September and October Forties delays are the most significant since May's loading program, when 11 out of 19 planned Forties cargos were deferred.
U.S. November RBOB gasoline futures were down 0.09 percent near $2.92 a gallon on Monday, following a rally last week ahead of the expiry of the October contract that sent the front-month contract to the highest level since April.
U.S. crude and the stock markets found support from the Institute for Supply Management (ISM), which reported its index of U.S. national factory activity rose to 51.5 from 49.6 in August, topping expectations for 49.7. It was the first time since May that the index has been above the 50 threshold that indicates expansion in the sector.
Stocks later pared gains after Federal Reserve Chairman Ben Bernanke delivered a broad defence of the central bank's controversial bond-buying stimulus plan.
An official survey of factory managers in China remained in contraction territory for a second successive month in September despite improving slightly from a nine-month low in August, as the world's second-biggest economy struggles against cooling exports, factory output and fixed asset investment.
The European Central Bank will hold a policymakers' meeting on Thursday and traders will be closely watching ECB chief Mario Draghi's comments.
The EU warned on Monday of an "economic and social disaster" if joblessness among young Europeans continued to rise, calling for a joint effort to combat record high unemployment in the countries which share the euro. (Additional reporting by Dmitry Zhdannikov in London; Editing by Dale Hudson and Alden Bentley)