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 Recent weak economic data from the United States has also dampened
the outlook for fuel demand in the world's largest oil consumer.
February Brent crude had edged down 10 cents to $106.65 a barrel by
0249 GMT after closing down 0.47 percent in the previous session.
U.S. crude for February delivery was at $91.85, up 5 cents after
settling at a two-session low on Monday.
"Oil markets seem to have weakened in the last few days because of
lower U.S. economic indices like employment data and a rise in oil
exports from Libya," said Ken Hasegawa, a commodity sales manager at
Newedge Japan.
Major powers and Iran have also moved a step closer to resolving a
long standoff over Tehran's nuclear ambitions after endorsing a deal
that will come into force on Jan. 20.
The parties are likely to start talks on a final settlement in
February, a diplomatic source said on Monday.
A resolution to the issue could see western powers lifting sanctions
on the OPEC producer's oil exports, increasing global supply.
Libya's production has also risen to 600,000-650,000 barrels per day
(bpd), with output at the El Sharara field back up to 300,000 bpd,
its oil minister said. Wrecked by months of domestic protests, the
OPEC producer's output is still below the 1.2 million bpd it was
producing in July.
Britain's biggest oilfield, Buzzard, where an outage last week
temporarily boosted Brent, is expected to return to normal output in
coming days, its operator Nexen confirmed on Monday.
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"There are no positive factors to buy oil except if you are
short-covering or bargain-hunting," Hasegawa said, adding that Brent
and West Texas Intermediate (WTI) were supported on technical charts
at $106 and $91.20-$91.30 respectively.
Prices could come under further pressure if oil product
stockpiles rose in the United States last week, reinforcing concerns
of lower demand after it posted the weakest monthly job growth in
three years in December, Hasegawa said.
Analysts in a preliminary Reuters poll said U.S. crude inventories
likely rose last week for the first time in seven weeks, up by an
average of 500,000 barrels.
In the refined products sector, distillate stocks, which include
heating oil and diesel fuel, were forecast to have risen 1.6 million
barrels on average, while gasoline stocks were seen to have
increased by 2.7 million barrels last week, the poll showed.
(Reporting by Florence Tan; editing by
Joseph Radford)
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