Brent crude for September delivery inched 19 cents lower to US$109.36 a barrel by 0501 GMT, after closing at its highest level in 11 weeks
Brent crude held steady above US$109 a barrel on Tuesday, on hopes that Europe would take further action to tackle its intractable debt crisis, while supply worries stemming from North Sea maintenance and Middle East tensions also supported prices.
The European Central Bank last week said it may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs, but details of how it will stabilise the bloc's bond markets have yet to be fleshed out.
"The market is trying to interpret everything that's coming out of the ECB so there is a lot of indecisiveness across assets," said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.
"The uncertainty, coupled with tension in the Middle East, is giving a slightly positive impact to oil prices."
Brent crude for September delivery inched 19 cents lower to US$109.36 a barrel by 0501 GMT, after closing at its highest level in 11 weeks.
US crude edged down 27 cents to US$91.93.
The drop in crude prices was kept in check as the violence in Syria and Iran's dispute with the West over Tehran's nuclear programme continued to keep investors worried about the potential threat to oil supply from the region.
Hopes that the US and China - the world's top two oil consumers - will adopt stimulus measures to boost growth were also a positive for the oil market.
"The economy looks stronger, but it's too early to say," Tony Nunan, a risk manager at Mitsubishi Corp said. "Oil is stuck in a range here."
China will release from Thursday a deluge of data, ranging from industrial output to investment, which is likely to show the world's second-largest economy is, at best, stabilising rather than recovering briskly.
"We're looking for some consolidation on industrial production before it starts improving again," Le Brun said.
On the supply side, expectations of a sharp fall in output from the North Sea's second-largest crude oil stream in September kept the September Brent price sharply higher than October, a market condition known as backwardation and points to strong prompt demand.
In North America, investors were also watching Tropical Storm Ernesto, which is forecast to move into the southern part of the Gulf of Mexico by Thursday, but it was too early to know if it could disrupt oil and gas operations in the Gulf.
Crude stockpiles in the United States were forecast down last week for a second straight time, a preliminary Reuters poll showed.
Tensions in the Middle East also underpinned oil prices.
Syria's prime minister fled the country on Monday as fighting continued, while a pipeline explosion halted Iraqi crude exports to Turkey.
Sudan will resume talks with South Sudan on August 26 to resolve remaining conflicts after reaching an interim oil agreement, the Sudanese state news agency SUNA said.
Disputes between the countries have reduced Sudanese crude exports by about 350,000 bpd from early this year.