SINGAPORE: Brent crude held steady near $109 on Tuesday, awaiting the results of two meetings to tackle Europe's debt crisis and Iran's nuclear programme, which could determine the future of global oil demand and supply.
EU leaders may introduce new measures to tackle the euro zone's worsening debt crisis during Wednesday's informal meeting to seek solutions to the Greek political crisis mired in conflict over debt and austerity policies.
Major powers will also meet Iran on Wednesday to discuss its nuclear programme, but tensions with the West remain high as the US Senate unanimously approved a package of new economic sanctions on Iran's oil sector on Monday.
Brent crude edged up 7 cents to $108.88 a barrel by 0448 GMT, but is still about $20 down from March's high. US crude for June inched up 9 cents to $92.66 ahead of its expiry later today.
"Prices just got to such a depressed point where there could be some speculative or technical buying," Ben Le Brun, a Sydney-based markets analyst at OptionsXpress said.
"Uncertainty in the euro zone is going to weigh out anything from Iran, unless the Iranian newsflow gets worse."
French President Francois Hollande will push a proposal to share the burden of European debt at an informal summit of EU leaders in Brussels this week, after talks about Greece's possible exit from the common currency zone raised jitters among investors.
Investors will have to wait until re-elections in Greece on June 17 for a clearer picture on whether the debt-burdened Greece will stay in the euro zone, Le Brun said.
"In times of uncertainty, traders prefer to take short positions and talk later," he added.
IRAN
Rising crude stocks in the United States and higher production from OPEC producers also capped oil gains although any signs of rising tensions between Iran and the West may lift prices again.
There was no immediate sign of a breakthrough in the tense confrontation over Iran's nuclear programme after UN nuclear watchdog chief Yukiya Amano held talks in Tehran on Monday.
Instead, the United States toughened its stance when the Senate unanimously approved on Monday a package of new economic sanctions on Iran's oil sector two days ahead of the meeting in Baghdad between major powers and Tehran.
"Short term, we feel there are risks to the upside," ANZ Bank analysts said in a note, adding that Brent looks to be targeting $110.15 a barrel.
"If WTI can clear $93 a barrel, we may see another dollar move towards $94."
Rising crude stockpiles in the United States may also weigh on prices. Crude inventories were expected to rise 1.0 million barrels last week, up for the ninth straight week, a Reuters poll of analysts showed. Distillates and gasoline stocks were forecast unchanged from the previous week's level.
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