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Brent futures crept up 2 cents to $90.73 a barrel by 1006 GMT,
while U.S. West Texas Intermediate crude (WTI), edged 12 cents
higher to $88.94 per barrel. Earlier in the session, prices fell
by more than 1%.
"(Brent) crude oil prices slid to (around) $90 a barrel as
rising US yields and a stronger US dollar dominated market
sentiment," ANZ analysts said in a client note.
"While supply remains tight, higher interest rates means
expensive storage of inventories. This could lead to further
destocking of oil inventories while increasing spot
availability."
The U.S. dollar on Monday rose to a 10-month high against a
basket of major peers after the U.S. government avoided a
partial shutdown and economic data fuelled expectations the
Federal Reserve will keep rates higher for longer, which could
slow economic growth.
Higher interest rates and a stronger dollar make oil more
expensive for holders of other currencies, which could dampen
oil demand.
Meanwhile, an announcement by Turkey's energy minister that the
country will restart operations this week on a pipeline from
Iraq that has been suspended for about six months further
weighed on prices.
"In theory, under the terms of the OPEC+ deal, production
(outside the GCC) should remain flat over Q4. However, Iraq’s
compliance has been somewhat spotty in the past and export
levels should be expected to rise, assuming the pipeline resumes
operations as planned," BMI Research analysts said.
OPEC+, the Organization of the Petroleum Exporting Countries
(OPEC) and other allies, is expected to keep its output
unchanged when it meets on Wednesday, keeping supplies tight.
There could be an element of profit-taking ahead of the OPEC+
meeting after the strong rally since mid-August, or maybe
economic fears are weighing, said Craig Erlam, OANDA analyst.
"The question now is whether...the recent shift in risk appetite
will influence the outcome of the meeting."
Saudi Arabia is likely to raise its November official selling
price of Arab Light crude to Asia for the fifth straight month,
according to a Reuters survey.
(Reporting by Natalie Grover, Laura Sanicola and Trixie Yap;
Editing by Shri Navaratnam, Simon Cameron-Moore, Peter Graff and
Ed Omsond)
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