Crude futures rose on Thursday, rebounding from the previous session's slump as investors fretted about potential disruptions to Middle East oil supplies after talks between world powers and Iran over its nuclear program ended with no agreement.
After seeming conciliatory before the Baghdad talks, Iran insisted on its right to nuclear fuel enrichment. Another meeting was set for June, suggesting the situation is fluid and prompting caution by oil investors. Trading volume was light and prices remained substantially below their highs for this year.
"We are seeing a repeat of Iran's normal tactics -- it extends an olive branch but in talks later, nothing happens, and this is muddling the oil markets," said Kyle Cooper, managing partner at IAF Advisors in Houston, Texas.
For weeks, oil markets have been balancing risks of supply disruptions from Iran against the possibility that demand will slump due to slowing global economic growth with the impact of the euro zone debt crisis weighing heavily.
Fears that Greece may leave the euro zone kept buyers cautious about bidding up oil prices too high. Weak economic data from China, Europe and the United States also fed jitters about the shaky global economy.
In China, factory output faltered in May, according to official data, as export orders fell to two-month lows, pointing to sluggish economic activity in the first half of the year and denting the outlook for oil demand.
The euro zone sunk further into the doldrums this month as new factory orders shrivelled, forcing companies to run down backlogs and slash workforces, surveys showed.
Demand for long-lasting U.S. manufactured goods rose less than expected in April while weekly jobless claims dipped only modestly, adding to worries about the economy of the world's largest oil consumer.
In London, Brent July futures settled at $106.55 a barrel, gaining 99 cents, after touching a session high of $107.25. Prices were up early before weak Chinese and European economic data sparked selling.
The contract fell as low as $105.03, the weakest intraday price since Dec. 20 -- down 17 percent from its 2012 high of $128.40 struck on March 1.
U.S. crude for July closed up 76 cents at $90.66 a barrel, after climbing to an early high of $91.52. On Wednesday, it settled at $89.90, the lowest close for front-month U.S. crude since Oct. 21. U.S. crude is down about 18 percent from its 2012 high of $110.55, also hit on March 1.