(Reuters) - Brent crude climbed toward $99 a barrel on Monday as failed labor talks in Norway stoked worries of a total output shutdown, while hopes that China would ease monetary policy and improve fuel demand also supported prices.
Data from top energy user China showed annual consumer inflation cooling further in June, leaving room for Beijing to ease policy without stoking upward price pressures and helping most commodities recover from steep losses triggered by bleak U.S. jobs data in the previous session.
We need to bear in mind that China does have its growth target, said Michael Creed, economist at the National Australian Bank. I do imagine they will do anything policy wise to achieve that. If they do, it will support oil prices.
Brent rose 35 cents to $98.54 a barrel by 2.26 a.m. EDT after settling up a slight 0.4 percent last week in choppy trade supported by supply disruption fears from the Norway oil workers' strike and a launch of tough Western sanctions targeting Iranian crude exports.
Norway is the world's eighth largest oil producer.
U.S. crude was up 27 cents at $84.72 after falling 0.6 percent last week as tepid jobs growth in the United States dragged down global markets on Friday.
But investors were far from making aggressive bets amid growing evidence of a shaky global economy, remaining cautious ahead of China's GDP data, which is scheduled for later this week and likely to show the weakest expansion in three years.
Premier Wen Jiabao said on Sunday that China needed to aggressively fine-tune its economic policies to support its economy. In March, Wen cut the 2012 growth target to 7.5 percent, which would be the lowest since 1990.
Slower economic growth in China and the United States, as the euro zone debt crisis continues, has led Brent to post a fall of 20 percent in the second quarter, the largest three-month loss since the 2008 financial crisis.
Euro zone finance chiefs will try to flesh out plans to reinforce the single currency on Monday but their talks in Brussels may do little more than highlight the limitations of last month's deal to help indebted states and banks.
In the event that there are any delays in what was agreed to at the European Union Summit, financial markets would respond bearishly, Jason Schenker, president of Texas-based consultancy Prestige Economics, wrote in a note.
Talks between Norway's offshore oil workers and employers over pay and pensions failed for a third time on Sunday, raising the risk of a total shutdown in oil and gas production.
The strike has already cut Norway's oil production by about 13 percent and its gas output by about 4 percent and affected crude shipments. The Norway strike is certainly providing support to oil prices, NAB's Creed said.
Iran continues to search for ways to circumvent tough sanctions on its crude exports imposed by the United States and Europe to pressure Tehran to halt its disputed nuclear programme.
The second largest OPEC producer has reached agreements with European refiners to sell some of its oil through a private consortium, an official told the local news agency on Saturday.
Bad weather stopped crude exports from Iraq's southern Basra terminals, although the Russian Black Sea port of Novorossiysk returned to normal operations after a sudden flood forced the major export outlet for oil and wheat to suspend loadings.
Libya has resumed oil production and exports after political protests last week while Yemen says it will resume oil exports from its Maarib province after attacks from militants halted shipments for over a year.
(Editing by Clarence Fernandez)