Brent crude prices turned higher and U.S. oil pared losses on Monday after the dollar reversed and weakened and with Middle East unrest remaining a concern.
The dollar index <.DXY>, measuring the greenback against a basket of currencies turned weaker and the euro climbed to a session peak of $1.4100 after U.S. pending home sales data for February was better than expected. <.
Brent crude futures for May delivery rose 13 cents to $115.72 a barrel by 11:53 a.m. EDT (1553 GMT), after bouncing off its early $114.55 low. Brent's intraday high was $116.00.
U.S. May crude futures fell 68 cents to $104.72 a barrel, swinging between $103.60 and $105.76.
The dollar has weakened after the pending home sales data and crude bounced, said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.
A weaker dollar can lift oil prices by making dollar-denominated oil less expensive for those using other currencies while lowering the value of currency paid to producers and by attracting to commodities markets investors seeking better returns.
Oil felt pressure earlier by the stronger dollar index, that was lifted by hawkish comments by Charles Plosser, president of the Philadelphia Federal Reserve, who suggested on Friday a reversal from monetary easing policy would be needed in the not-to-distant future.
A U.S. central bank move to a tightening policy and higher interest rates and the end of the current stimulus, or quantitative easing measures, known as QE2, could remove liquidity from the market and slow economic growth and demand for oil, analysts and brokers said.
Libyan rebel successes capturing oil facilities and gaining recognition from Qatar had helped cool oil prices earlier along with the dollar's strength, brokers and analysts said.
LOW TRADING VOLUMES
Price volatility and the uncertainty of threats to supply from Middle East unrest and the conflict in Libya combined with an uncertain demand picture in quake-hit Japan and the debt-laden euro zone have curbed trading volumes, with weekly volume for U.S. crude the lowest for the year last week, according to Reuters data.
Light volume trading continued on Monday. Total U.S. crude trading volume, at just over 218,000 lots traded, was 73 percent below the 30-day average. Brent trading volume at just over 200,500 also was tracking below average.
Brent's premium to the U.S. benchmark West Texas Intermediate crude rose 66 cents to $11.08 a barrel also in choppy trading, swinging from $10.02 to $11.22, though remaining well off its March 1 record above $17.
(Additional reporting by Claire Milhench in London and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)