(Reuters) - Brent crude bounced from a near 17 month low below $95 a barrel hit earlier on Tuesday as the investor focus shifted to Iranian nuclear talks and hopes for further monetary stimulus from central banks.
Brent crude futures briefly turned positive and they were trading 21 cents lower at $95.85 a barrel by 0841 EDT. U.S. crude remained positive, up 22 cents at $83.49.
The market has rebounded on worries about the outcome of the nuclear talks in Moscow and a general rebound in the risk sentiment, Thorbjorn bak Jensen, oil analyst with Global Risk Management, said.
Iran and the six world powers meet in Moscow for the second day of two day talks concerning its nuclear program. So far, there has been no clear progress towards ending a decade-long dispute which risks sparking a new Middle East war.
Oil was supported by a marginal rise in European equities as weak German data bolstered expectations for market-friendly stimulus from European policymakers and the U.S. Federal Reserve also eyed for possible action soon.
The U.S. Federal Reserve begins a two-day policy setting meeting later in the day, with attention focused on whether it will unveil any more stimulus to support a flagging recovery.
Brent crude earlier slipped to $94.44, the lowest since January 2011, along with the single currency and equities after a comment from a German constitutional court that said Angela Merkel's government had not consulted parliament sufficiently about the configuration of Europe's permanent bailout scheme, the European Stability Mechanism (ESM).
Spain's short-term borrowing costs soared as investors worried the country, the euro zone's fourth largest economy, will soon be forced to ask for international aid.
Even though an EU ban on Iranian crude imports will take effect on July 1, the oil market has shown some signs of oversupply. The August Brent crude contract price fell below the September contract, suggesting ample supply in the immediate market.
That is despite planned maintenance work at the UK's Buzzard oilfield in the third quarter and comments from OPEC last week.
OPEC will reduce output to adhere to its 30 million barrel per day production ceiling and the effects should be seen in July, OPEC Secretary-General Abdullah al-Badri said last week.
The Buzzard oilfield feeds into Forties crude, which is one of the four North Sea crude oil streams used to price about two thirds of world's oil.
(Additional reporting by Luke Pachymuthu in Singapore; editing by Keiron Henderson)