Brent crude held steady above US$117 per barrel on Tuesday after settling down for the third straight session the previous day, with traders looking ahead to Italy's upcoming elections.
Political uncertainty in Italy could add to woes in the euro zone and raise questions about oil demand. Italy is the euro zone's third-biggest economy and if parliementary election results over the weekend threaten its economic reform, that could darken the outlook for a region already in a deeper-than-forecast recession.
"We've just came off from the peak a little and the market is beginning to focus on the Italian elections," said Ric Spooner, chief markets analyst at CMC Markets in Sydney, pointing to rising caution among investors in risk markets.
"The caution might be a bit sharper in oil as we had quite a bit of a run-up and the market is vulnerable to bad news at the moment."
Brent crude for April delivery edged up 9 cents to US$117.47 a barrel by 0404 GMT after settling down for the third straight session on Monday. US crude for March fell 28 cents from Friday's close to US$95.58.
There was no settlement for US crude futures on Monday due to a holiday there.
Brent is nearly US$2 off a nine-month high of US$119.17 hit earlier in February on a price run-up spurred by economic recoveries in the world's top two oil consumers - the United States and China - and higher demand forecasts from he US Energy Information Administration and OPEC.
Trading will pick up later on Tuesday as US-based traders return from their break. Release of US oil inventories data has been delayed to Wednesday and Thursday.
Technical charts point to lower prices in the absence of fresh data that could sway the market.
Brent oil is expected to fall into a range of US$111.97-US$113.67 per barrel over the next four weeks, similar to a downtrend between March and June last year, Reuters markets analyst Wang Tao said.
A technical analysis of West Texas Intermediate (WTI) price chart showed the US crude is in a potential double top formation, a bearish signal, and it could break below a support level of US$94.90, Spooner said.
Investors are also eyeing the next round of nuclear talks between major powers and Iran next week.
Sanctions on the OPEC producer have reduced its oil exports, which could have fallen below 1m barrels per day (bpd) in January, according to estimates from the International Energy Agency (IEA).
"With a significant geopolitical risk premium currently priced in, we feel that some downside is warranted, unless there is a significant escalation in MENA (Middle East North Africa) tensions," Marc Ground, a commodities analyst at Standard Bank said in a note.
Major world powers have offered to ease sanctions on Tehran's trade in gold and precious metals in exchange for the closure of a uranium enrichment plant, but a spokesman for Iran's foreign ministry turned it down on Monday.