Brent crude gained slightly above $109 on Tuesday, as markets awaited the results of two meetings to tackle Europe's debt crisis and Iran's nuclear programme, which could affect global oil demand and supply.
European Union leaders may introduce new measures to tackle the euro zone's worsening debt crisis during Wednesday's informal meeting to seek solutions to the Greek political turmoil, mired in conflict over debt and austerity policies.
Major powers will also meet Iran on Wednesday to discuss its nuclear programme, but tensions with the West remain high, as the US Senate unanimously approved a package of new economic sanctions on Iran's oil sector on Monday.
Brent crude rose 29 cents to $109.10 a barrel by 0623 GMT, but is still about $20 down from its March high. US crude for June gained 36 cents to $92.93 ahead of its expiry later on Tuesday.
"Prices just got to such a depressed point where there could be some speculative or technical buying," said Ben Le Brun, a Sydney-based markets analyst at OptionsXpress.
"Uncertainty in the euro zone is going to outweigh anything from Iran, unless the Iranian newsflow gets worse."
Sharing the debt-burden
French President Francois Hollande will push a proposal to share the burden of European debt at an informal summit of EU leaders in Brussels this week, after talks about Greece's possible exit from the common currency zone raised jitters among investors.
Investors will have to wait until new elections in Greece on June 17 for a clearer picture of whether the debt-burdened country will stay in the euro zone, Le Brun said.
"In times of uncertainty, traders prefer to take short positions and talk later," he added.
Iran
Rising crude stocks in the United States and higher production from OPEC producers also capped oil gains, although any signs of rising tension between Iran and the West may lift prices again.
There was no immediate sign of a breakthrough in the tense confrontation over Iran's nuclear programme after U.N. nuclear watchdog chief Yukiya Amano held talks in Tehran on Monday.
Instead, the United States toughened its stance when the Senate unanimously approved on Monday a package of new economic sanctions on Iran's oil sector two days ahead of the meeting in Baghdad between major powers and Tehran.
"Short-term, we feel there are risks to the upside," ANZ Bank analysts said in a note, adding that Brent looked to be targeting $110.15 a barrel.
"If WTI can clear $93 a barrel, we may see another dollar move towards $94."
Rising crude stockpiles in the United States may also weigh on prices. Crude inventories were expected to rise 1.0 million barrels last week, up for the ninth straight week, a Reuters poll of analysts showed. Distillates and gasoline stocks were forecast unchanged from the previous week's level.
