Brent crude was little changed above $107 today, after falling in the previous session, on concerns of demand growth as investors worried last week's pact by European leaders may not be enough to stop the region's debt crisis from worsening.
The worries echoed across financial markets. Asian stocks sank, the euro languished near a two-month low, gold plunged to a seven-week low and copper fell after posting its biggest decline in three weeks. Oil will be driven by headlines on Europe's fiscal condition and an upcoming Opec meeting, with support coming from supply uncertainties in the Middle East.
Brent rose 6 cents to $107.32 a barrel, after sliding to as low as $107.07 and settling down $1.36. US crude gained 17 cents to $97.94, after settling $1.64 lower, trading below $100 for a third day.
Friday's optimism over the European summit deal to strengthen budget discipline was overshadowed by its shroud of legal uncertainty and the absence of an unlimited financial backstop for the single currency.
The uncertainty worsened after ratings agency Moody's said it would review ratings of all EU member states in the first quarter of 2012, while rival Fitch said the summit had failed to provide a "comprehensive" solution to the debt crisis.
Oil investors are awaiting the outcome of a meeting of producer group Opec. The group yesterday targeted a new 30-million barrel-a-day production deal aimed at healing the rift left by a bad-tempered failure to reach an output agreement when it last met in June.
At stake for the Organization of the Petroleum Exporting Countries when it meets today is a credible policy going into a year when a sluggish global economy could undermine fuel demand and send oil prices tumbling from over $107 a barrel now.
Without a collective supply target, Opec members with spare capacity - Saudi Arabia and its Gulf Arab allies - remain free to pump at will.
Saudi oil minister Ali al-Naimi confirmed yesterday that the kingdom pumped 10.047 million barrels per day in November.
Financial markets are awaiting the outcome of a US Federal Reserve meeting later in the day to get an idea of the outlook for the world's biggest economy.
The Fed's policy-setting Federal Open Market Committee looks set to hold off on easing US monetary policy for a second meeting as it gauges the impact of Europe's crisis on the economy. The United States has had a series of positive numbers, raising hopes of a steady economic recovery in the country that will help boost demand in the world's biggest oil consumer.
Unrest in the Middle East is helping put a floor under prices as participants worry about supply disruptions.
An explosion ripped through a gas pipeline near the town of Rastan in the central Syrian province of Homs and flames were seen rising from the site, a witness said, the second reported blast at an energy pipeline in Homs in a week.
