U.S. crude oil traded below $86 a barrel and near a 10-week low on Monday as investors focused on ample supplies after the resignation of Egyptian President Hosni Mubarak eased concern of disruptions.

Mubarak's departure last week after 18 days of mass protests eased concerns of unrest spreading across the Middle East and North Africa, source of more than a third of the world's oil.

"Concerns over a potential disruption to supplies have eased and now that the immediate threat is out of the way, the market will start focusing again on macroeconomic fundamentals," said Ben Westmore, commodities analyst with National Australia Bank.

U.S. crude, also known as West Texas Intermediate or WTI, for March was down 23 cents to $85.35 a barrel by 0915 GMT, after falling as low as $85.10 on Friday, the lowest intraday price in 10 weeks.

Brent crude, the benchmark in Europe, Africa and the Middle East, for April was up 24 cents to $101.18. The events in Egypt helped push Brent above $100 at the end of last month for the first time since 2008.

The premium of Brent to U.S. crude reached a record $16.24 on Friday, the last day of trading for the March Brent contract. The spread between the April contracts was around $12 on Monday.

U.S. crude has been weighed down by near-record inventories at the Cushing, Oklahoma delivery point for U.S. crude futures, while a steady fall in North Sea supplies -- the physical basis for the Brent contract - has supported the European marker.

"The crude market has shifted focus back to fundamentals. WTI was anchored by record crude supplies in Cushing, while tightness in the North Sea market provided support to Brent prices," Mark Pervan, head of Commodity Research at ANZ Bank, said in a research note.

INFLATION

Key data for investors this week include Chinese January inflation figures scheduled for release on Tuesday.

Traders said that consumer prices may have risen 4.9% in the year to January, well below the consensus forecast of 5.3%. The official data will be announced on Tuesday.

Analysts say that financial markets could remain volatile from uncertainty during the next phase of Egypt's political transition and its potential spillover effects to the broader Middle East.

Egypt's military delivered an ultimatum on Monday to dozens of committed protesters in Tahrir Square to leave and let life get back to normal or face arrest.

In other markets, European shares rose on Monday to a 29-month high as talk of slower-than-expected Chinese inflation data and strong China trade figures boosted sentiment.

The euro fell to a three-week low versus the dollar on Monday as investors turned cautious ahead of peripheral bond auctions in Spain and Italy this week.