New York's main contract, light sweet crude for June delivery, was down 59 cents to $112.93 and Brent North Sea crude for June eased 68 cents to $124.44.

"Oil has gone through some gyrations since the news (on) Osama bin Laden," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

"It is holding relatively flat, but oil markets remain vulnerable to geo-political risks with or without bin Laden and so oil prices continue to be affected by the unrest in the Arab world and the low value of the US dollar," Shum told AFP.

New York's contract plunged to $110 after the news of bin Laden's death broke Monday, but reversed course to peak at $114.83 before easing back.

Matt Smith at Summit Energy said that eventually people realised that the Al-Qaeda leader's death "will increase uncertainty more than add clarity" as his followers might carry out more attacks to show they have not been defeated.

Investors are also monitoring political unrest in the oil-producing Arab world and its impact on crude supplies.

In Libya, forces loyal to leader Moamer Qadhafi have launched a new incursion into the besieged rebel city Misrata as his son, killed in a NATO-led air strike, was buried in Tripoli.

Global powers will meet in Rome on Thursday to find a solution to the Libyan political crisis, and discuss whether to arm rebels and finance them through the sale of oil.

The dollar was up against the euro in early Asian trade Tuesday as markets revelled in the Al-Qaeda leader's death.

However, analysts said that the fragile nature of the US economy is likely to resume eating into the greenback's strength in the near term.

A weaker US currency makes dollar-priced oil cheaper, boosting demand and leading to higher prices.