Global benchmark Brent crude has dropped almost $ 5 from a 3 1/2-year high of $ 80.50 a barrel on May 17, after reports that Opec and Russia may increase supply at a June meeting.
This would reverse policy after 17 months of supply curbs that have largely removed excess global oil inventories.
Brent rose 40 cents to $ 75.79 a barrel by 0925 GMT, after trading as low as $ 74.81 earlier. US crude was up 25 cents at $ 66.98.
“Fundamentally, not much has changed. Oil remains well supported, although the sweetspot has entered a mature phase,” said Konstantinos Venetis, senior economist at TS Lombard.
“Some air is fizzling out of the market and position-squaring raises the likelihood of an overshooting to the downside in the run-up to Opec’s June meeting.”
Political turmoil in Italy has sent the euro to a 10-month low against the dollar on concern a snap election would lead to a eurosceptic government in Rome. A stronger dollar makes dollar-denominated oil more expensive for holders of other currencies.
“A dearth of bullish catalysts will make hard work of any recovery,” said Stephen Brennock of oil broker PVM.
The Organization of the Petroleum Exporting Countries and non-Opec producers led by Russia have had a pact to curb output by about 1.8 million barrels per day since January 2017, driving down inventories and pushing up oil prices.
Amid concerns the price rally has gone too far, Saudi Arabia and Russia are discussing raising Opec and non-Opec oil output by around 1 million bpd, sources told Reuters on May 25. Opec meets in Vienna on June 22.
Still, some analysts remain cautious as the details have yet to be worked out. Ministers from Saudi Arabia, Kuwait and the United Arab Emirates meet this weekend, a source said.
“Clarity will likely take some time to emerge,” said JBC Energy.
Lending some support to prices were expectations that US crude inventories probably fell by 1.8 million barrels last week according to a Reuters poll.
Industry group American Petroleum Institute (API) releases its weekly supply report at 2030 GMT on Wednesday, followed by the official government data on Thursday.