Brent crude oil slipped briefly below $108 a barrel on Monday after euro zone data showed retail sales declined across the board for the first time in three months, highlighting the fragile nature of Europe's economic recovery and energy demand.
The EU statistics office said retail trade volume fell 0.5 percent on the month in June, in line with expectations, following a 1.1 percent rise in May.
Investors were also cautious after Iran and the United States signalled a will to improve relations and end a dispute over Tehran's nuclear programme, which has added a risk premium to financial markets and helped prop up oil prices.
Brent crude fell $1 per barrel to a low of $107.95 before recovering to trade around $108.40 by 1015 GMT. U.S. light crude oil futures lost 50 cents to $106.44.
"Euro zone services data were mixed, with Germany not ideal, and China data were not impressive either," said Andrey Kryuchenkov, oil and commodities strategist at VTB Capital. "Hence you see ... extended profit-taking from Friday."
Markets remained wary of a sharp selloff though, with several key oil exporters seeing declines in oil output, including Libya, Iraq and Yemen.
Libya's oil exports were flowing at less than half normal rates on Friday as strikes and protests kept major terminals shut in one of the worst disruptions to hit the North African OPEC producer in the past year.
Shipments from Iraq may be cut by between 400,000 and 500,000 barrels per day in September. Tribesmen blew up Yemen's main oil export pipeline late on Saturday, halting the flow of crude.
"Disruptions to supply from several Middle East and North Africa producers are underpinning the market," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
But hints at improving relations between Iran and the United States over Tehran's nuclear programme kept a lid on prices.
Newly elected Iranian President Hassan Rouhani has called for dialogue to reduce "antagonism and aggression", while the United States has said it was ready to work with Rouhani's government if it were serious about engagement.
Iran's oil exports have been slashed by more than half due to Western sanctions aimed at forcing Tehran to quit its nuclear programme. That has helped keep oil above $100 for most of 2012 and this year, despite a weak global economy.
"Given the change of tone in Iran and comments from the United States, we are seeing risk premiums surrounding the Middle East and Iran coming off," said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt's Bulletin.
A weak jobs report last week from the United States, the world's top economy and oil consumer, also capped oil prices.
"We are also seeing some adjustments in prices after Friday's jobs report," Barratt said. He expected U.S. oil to trade between $108.50 and $102.50 over the next few days, with Brent commanding a $2 premium.