Brent crude nudged higher on Monday as supply disruptions in Europe helped halt last week's losses, while cautious investors waited for the results of this week's U.S. Federal Reserve meeting.
Disruptions in Libya, Iraq and elsewhere have removed well over 500,000 barrels per day (bpd) from the market. Other suppliers, such as Sudan, might have their exports reduced in the coming weeks, analysts say. North Sea benchmark Forties crude flows have been curbed due to maintenance.
The lost production helped bolster a market that has been worrying about the prospects for fuel demand as a number of economies, including China, experience slower growth.
Policymakers at the U.S. central bank will meet on Tuesday and Wednesday to discuss monetary policy and are expected to issue a statement on Wednesday afternoon.
"Even though fundamentals seem to show that the prices should be lower, the Fed's promise of quantitative easing could support the market."
Brent crude gained 28 cents to settle at $107.45 per barrel after slipping 0.8 percent last week, the largest weekly decline since May. U.S. oil slipped 15 cents to settle at $104.55. The North Sea benchmark's premium over its U.S. counterpart widened to 3 dollars.
Gasoline futures lagged the complex, dipping 3.2 cents to settle at $3.0125 a gallon after tropical storm Dorian dissipated without causing any damage to the refining industry, and North Atlantic Refining announced its 115,000 barrel per day Come By Chance refinery in Newfoundland was fully back online.
The recent fall in the prices of ethanol credits has also weighed on gasoline, according to analysts. Refiners must purchase ethanol credits, also known as Renewable Identification numbers, to comply with environmental regulations. RINs, which traded for 5 cents late in 2012, reached record levels of $1.50 earlier this month, only to fall to around 95 cents on Monday.
Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, said the market appeared fairly balanced, but investors had been "taking money off the table after a strong run-up a couple of weeks ago."
The North Sea's Forties pipeline has cut pumping rates by about 40,000 bpd because of maintenance, trade sources said, tightening supply of the crude that underpins the Brent benchmark.
The Libyan oil minister said on Monday that operations at the crude oil export terminals of Es Sider and Ras Lanuf continued as normal, despite protests and strikes.
Data from the IntercontinentalExchange showed on Monday that large speculators increased their net long positions in Brent crude futures in the week to July 23.
The rise in long positions continues trends from the previous week, when hedge funds took huge positive bets on U.S. crude just before the market turned lower. Positive wagers by money managers on U.S. crude reached a record high for the week ended July 23, data from the Commodity Futures Trading Commission showed.