Brent crude eased towards $107 a barrel on Tuesday as investors worried that a slower global economy would dampen oil demand, but supply outages in major oil producers kept losses in check.
Market players also awaited a Federal Reserve meeting for clues on the prospects for a U.S. stimulus programme that has spurred demand in the world's top oil consumer. The Fed is due to issue a statement on Wednesday after its two-day meeting.
U.S. inventory data will also offer an insight on its oil demand. U.S. commercial crude oil stockpiles likely fell last week for the fifth straight week, a Reuters poll of six analysts showed on Monday.
Brent futures slid 24 cents to $107.21 a barrel by 1338 GMT, after falling 0.8 percent last week.
U.S. crude fell 84 cents to $103.71. The North Sea benchmark's premium over its U.S. counterpart widened to $3.48.
"Most of the macroeconomic data over the last month or so have indicated that many of the high growth economies of the world are finally starting to slow," said Dominick Chirichella of Energy Management Institute.
Investors fretted that the manufacturing surveys later this week might highlight weakness in China.
Activity in China's manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signalling a protracted slowdown in the world's second-largest economy as demand at home and abroad sags.
"Chinese data along with actions by the government are clearly pointing to a slowing of the main economic and oil demand growth engine of the world," said Chirichella.
David Hufton, managing director of oil broker PVM Oil Associates in London estimates that up to 1 million barrels a day of expected July output may be unavailable.
"Being an oil bear is a tough existence in the short-term trading world," said Hufton.
Assailants attacked an Islamist party office in Tripoli on Monday and a soldier was killed in fighting in Libya's eastern city of Benghazi, officials said, in an escalation of violence following the assassination of a political activist last week.
The Libyan oil minister said operations at the crude oil export terminals of Es Sider and Ras Lanuf continued as normal, despite protests and strikes.
Also supporting oil prices were expectations that Iraq, OPEC's second-biggest producer, will report an output decline for 2013, its first after two years of robust gains.