Oil prices edged higher on Monday, snapping a string of four lower finishes, as a drop to multi-month lows attracted bargain hunters and as the euro rose against the dollar on hopes that Europe's leaders can keep the euro zone intact.
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Brent and U.S. crude prices fell sharply in early trade coming out of the weekend, still feeling pressure from concerns that slowing U.S. and Chinese economies and the euro zone crisis will curb petroleum demand.
The euro strengthened and European equities rose after last week's batch of grim global economic data fueled hopes that there is a greater likelihood of central-bank policy action to stimulate growth and optimism that European leaders will fashion a plan to ease the region's debt crisis.
"Europe's stock market stabilized, and the euro bounced and the dollar weakened, on the hope there will be central bank stimulus to stop the bleeding and that pulled crude off the early lows," said Phil Flynn, analyst at Price Futures Group in Chicago.
Finance ministers and central bank governors of the Group of Seven (G7) industrialized nations will hold a conference call on Tuesday to discuss the European debt crisis.
Leaders from the larger Group of 20 leaders will meet in Mexico June 18-19, with Europe likely to dominate the agenda.
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Brent July crude rose 64 cents to $99.07 a barrel by 2:42 p.m. EDT (1842 GMT), having recovered after dropping as low as $95.63, the lowest intraday price since Jan. 26, 2011.
U.S. July crude rose 75 cents to settle at $83.98, after falling intraday to $81.21, the lowest since prices were last under $80 a barrel on Oct. 6, 2011.
Total Brent crude volumes lagged U.S. crude turnover, with a British bank holiday thinning trade. U.S. volume was 3 percent under the 30-day average, while Brent dealings were 30 percent under the 30-day average.
The buying looked timed with weak relative strength index (RSI) readings for Brent, U.S. crude and also U.S. gasoline and heating oil futures.
All had 14-day RSI readings well below the 30 level that is considered a signal of an oversold condition for traders using technical indicators.
SLOWDOWN RAISES STAKES FOR FED
Last week's news that U.S. job growth stumbled in May, the jobless rate rose for the first time in nearly a year and data from No. 2 oil consumer China indicating a slowdown in its manufacturing sector combined to send oil prices reeling.
Brent posted a 7.86 percent weekly loss and U.S. crude fell 8.4 percent, the fifth consecutive weekly drops for both.
The fading U.S. jobs growth has raised expectations that the Federal Reserve might be more inclined to engage in a third round of stimulus, known as quantitative easing, a move that would be expected to weaken the dollar.
Investors await Federal Reserve Chairman Ben Bernanke's Thursday testimony before a congressional panel for any clues about plans for bolstering a faltering economic recovery.
Also on tap this week are policy meetings of the European Central Bank on Wednesday and the Bank of England on Thursday.
Oil prices have fallen back after Brent rallied above $128 a barrel in March, the highest since 2008.
That rally was supported by concerns about supply disruptions as sanctions on Iran tightened and with talks with the West over Tehran's nuclear program suspended as a European Union embargo on Iran's oil was set for July.
The threat to economic growth from high oil prices spurred consumer countries to consider releasing strategic reserves and prompted top exporter Saudi Arabia to raise production in an effort to bring prices back to $100.
The higher Saudi production, along with more from Iraq and post-Gaddafi Libya, helped crude oil stockpiles rise in the United States and eased worries about loss of Iranian barrels, while revived talks with between Iran and major power in May also helped pull oil prices down.
IRAN, IAEA MEET THIS WEEK
The U.N.'s International Atomic Energy Agency (IAEA) and Iran are set to hold a second round of talks in Vienna on Friday and IAEA Director General Yukiya Amano said he hoped an agreement could be finalized that will allow the IAEA to resume the investigation into Tehran's nuclear program.
Iran and the six powers - the United States, France, Russia, China, Germany and Britain - will meet for a third time this year in Moscow on June 18-19 after making little progress on the dispute at their most recent meeting in Baghdad last month.