Geopolitical tensions in Ukraine and Libya underpinned prices, but did little to push them higher in the absence of any supply disruptions.
Brent crude, which has fallen for the past two weeks, extended losses to fall 7 cents to $102.22 a barrel by 07:02 London time.
U.S. crude for October delivery was at $93.64 a barrel, down 1 cent after technical issues delayed a scheduled start on CME’s Globex platform. Last week, U.S. oil posted its fifth straight weekly loss.
“I see a lot of buying interest at around $101 for Brent,” said Yusuke Seta, a commodity sales manager at Newedge Japan, adding that it has likely bottomed out.
“I don’t think it’ll break below $100 as some of the OPEC countries will not be able to survive at prices below $100,” he said.
Weak demand and healthy oil production across the globe have helped created a supply glut in the Atlantic Basin, pushing Brent into its longest contango since early 2011, Morgan Stanley analysts said in a note.
In a contango market, the prompt oil price is lower than those in future months, reflecting weak spot demand.
“Weak physical market increases near-term downside risk for Brent price and structure, especially around expiry,” the bank’s analysts, led by Adam Longson, said.
“We expect Brent to trade in a slightly lower range for much of third quarter, barring any geopolitical escalation.”
Unrest in Libya, Iraq and Ukraine have the potential to cause oil prices to jump, but these price spikes cannot be sustained over months as the market still has plenty of supply, Newedge’s Seta said.
Libya loaded a second tanker at its largest oil port in Es Sider despite fierce fighting in the capital that destroyed the Tripoli airport during the weekend.
Last week, the OPEC producer raised output to 612,000 barrels per day (bpd), the National Oil Company said, although this is still short of levels of about 1.4 million bpd pumped a year ago.
In Europe, Russian President Vladimir Putin will meet his Ukrainian counterpart Petro Poroshenko for the first time in months on Tuesday to try to reach a compromise on Ukraine.
The dollar index powered up near a 1-year peak as the U.S. Federal Reserve prepared to lay the groundwork for the central bank’s first interest rate hike in nearly a decade.
Dollar-denominated commodities such as oil become less affordable for holders of other currencies when the greenback strengthens.