Brent futures dipped towards $113 per barrel on Monday, adding to last week's fall as supply disruption fears from Iraq eased as government forces launched a pushback against a Sunni militant takeover of large areas of the country.
The European benchmark is still up 3.4% so far in June, on track for its best monthly showing since August after touching a nine-month high earlier in the month, while the US contract is up nearly 3%, driven primarily by supply fears.
Brent crude lost $0.22 to $113.08 per barrel by Monday morning, after ending the week 1.3% lower.
US crude declined $0.70 cents to $105.48 per barrel, after sliding nearly 1.4% in the past week.
“We saw some profit-taking last week after sharp gains in prices and we are seeing that continuing,” Newedege Japan commodity sales manager Ken Hasegawa told Reuters.
“It is a bit difficult to bet on oil on both sides at the moment. Overall the market seems to be headed lower with range bound trades.”
Brent faces support at $112 per barrel and key resistance at $115, while the US contract has strong support a little below $105 and resistance at the $107 to $108 level, Hasegawa said.
Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries and the bulk of its shipments are from the country's south - an area that has so far been largely unaffected by the unrest.
To recapture parts of the north, the army sent tanks and armoured vehicles to dislodge insurgents from the northern city of Tikrit in the second day of a pushback.
The market also drew comfort from a meeting between US Secretary of State John Kerry and Saudi King Abdullah in which the two briefly discussed global oil supplies during a meeting on the crisis in Iraq.
The meet assured investors that top exporter Saudi Arabia may step in to fill any gap if supplies from Iraq get disrupted.
“We have some guarantee of supply that Saudi Arabia will step in if needed,” Hasegawa said.
A reopened port in Libya and an easing of tensions over the Ukraine crisis also weighed on oil.
The European Union signed an historic free-trade pact with Ukraine on Friday and warned it could impose more sanctions on Moscow unless pro-Russian rebels act to wind down the crisis in the east of the country by Monday.
Investors are awaiting key economic numbers due later this week to gauge the outlook for the United States and the global economy to assess the direction for oil markets.
Data due this week includes the June payrolls report on Thursday, a day early due to the 4 July holiday.
Economists polled by Reuters on average expect jobs to rise 213,000 in June for a fifth straight month of gains above 200,000, a run unmatched since the September 1999-January 2000 period.