LONDON: Oil prices edged higher on Monday, climbing back towards $108 per barrel in a reaction to heavy losses last week, but worries about Greece's possible exit from the euro counterbalanced talk of the prospect of an economic stimulus in China.
A summit of the G8 at the weekend failed to deliver any signal that Europe would act quickly to address the risk of a chaotic Greek exit from the euro, leaving investors in a state of alert, curbing an upturn in oil prices.
"Gains may be short-lived as EU politicians as usual are having a hard time agreeing on anything. However an interesting week ahead with the European debt crisis posing a risk on the downside and the potential for nuclear talks with Iran to fail on the upside," said Thorbjoern Bak Jensen, oil analyst at Global Risk Management.
Brent crude was up 73 cents to $107.87 a barrel by 1151 GMT, up from a 2012 low on Friday.
In the last three weeks, Brent has shed almost 11 percent - its largest three-week fall since May 2011. US crude gained 28 cents to $91.76, its first rise in seven sessions.
Barclays Capital's technical chart analysis team predicted further sell-offs in oil markets saying it was bearish on both crude benchmarks in the medium term.
"We are bearish for WTI and look for a move toward $90.45. Beyond there, we target $90.00 and then $89.00. The aggressive selloff in Brent broke below our target near $108.50 and compels us to expect further downside toward $104.75," the team wrote in their daily technical note.
IRAN
Sending a strong message to Iran ahead of talks on Wednesday, G8 leaders put the International Energy Agency on standby for action if tougher new sanctions on Tehran threaten to strain supplies.
Western states have imposed sanctions on Iran's energy and banking sectors since the beginning of this year to try to disrupt Iran's nuclear program.
The European Union is preparing to apply a total embargo on the purchase of Iranian crude oil in July.
However, in a bearish move for oil markets, the UN nuclear watchdog chief began rare talks in Tehran on Monday after voicing hope for a deal to investigate suspected atomic bomb research - a gesture that Iran may count on to get international sanctions relaxed and deflect threats of war.
"All signs point to progress. Not everything is going to be solved by these meetings but at least there is some progress," said Oliver Jakob of consultancy Petromatrix.
China's premier called for additional efforts to support growth on Sunday, boosting sentiment in oil markets after a stretch of losses last week incurred by fears Greece's political turmoil could spread to other countries in Europe.
China's crude oil imports from Iran rebounded more than 50 percent in April from March after resolving pricing disputes over term contracts, but shipments fell nearly a quarter from a year ago, with Saudi Arabian supplies helping to plug the gap.
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