Oil prices slipped below $98 a barrel Monday as markets remained cautious about the ability of new leadership in Greece and Italy to manage the countries' financial crisis.
By early afternoon in Europe, benchmark crude for December delivery was down $1.02 to $97.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.21 to settle at $98.99 in New York on Friday.
In London, Brent crude was down 89 cents to $113.27 a barrel on the ICE Futures exchange.
Crude has jumped about 32 percent from $75 on Oct. 4 on hopes Greece will avoid a chaotic bond default and the financial crisis it would likely trigger. Last week, Greece and Italy replaced their leaders with economists in a bid to bolster confidence in their economic policies.
Italy's auction of five-year bonds on Monday was successful as it sold the full amount on offer, €3 billion ($4.1 billion), but the paper's yield rose to 6.29 percent, its highest point since 1997 and well above last month's 5.32 percent.
Even if countries such as Greece and Italy can implement austerity measures to help lower debt levels, Europe faces waning competitiveness and weak economic growth, which could prolong the debt crisis for years.
"Markets have been remarkably patient so far," DBS bank said in a report "The longer-run problems are just as big if less acute. A long hard slog remains."
The eurozone's debt crisis continued to boost the U.S. dollar, keeping a lid on oil prices by making crude more expensive for investors trading in other currencies.
The euro was down to $1.3664 from $1.3747 late Friday in New York.
Analysts said that growth figures from Japan, which grew by 6 percent in July-September, helped sustain oil price. It was the first time in four quarters that the world's third-largest economy, recovering from the March earthquake and tsunami catastrophe, posted positive growth data.
"Growing risk appetite could push oil prices up further in the near term and help (the Nymex contract) to overcome the $100 mark," said a report from Commerzbank in Frankfurt. "Brent could additionally profit from the outbreak of cold in Europe."
In other Nymex trading, heating oil lost 0.2 cent to $3.1696 per gallon and gasoline futures fell 3.16 cents to $2.5722 per gallon. Natural gas slumped 7.2 cents at $3.512 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
Copyright 2011 The Associated Press.