(Reuters) - Brent crude held above $97 on Thursday, trading in a narrow range with investors reluctant to take positions ahead of the outcome of a meeting of producer group OPEC and Greek elections.
Oil has fallen around a quarter from 2012 highs reached in March as a weak global economy, exacerbated by a worsening debt crisis in Europe, has cast doubts on the outlook for fuel demand, while major suppliers like Saudi Arabia boosted output.
Participants are looking out for any change in stance in OPEC's output policy with latest data from the world's top oil consumer the United States adding to a raft of signals that point to a slowdown in its recovery. They are also awaiting clarity on whether Greece will stay in the euro zone.
Brent crude rose 42 cents to $97.55 a barrel by 0605 GMT, after dipping to as low as $96.80 earlier. U.S. crude gained 27 cents to $82.89, after settling at the lowest since October 6.
The broad consensus seems to be that OPEC would maintain status quo on its output quotas, said Victor Shum, a senior partner at oil consultancy Purvin & Gertz said.
Prices would remain under downward pressure for some time because of the weak outlook for Europe.
U.S. crude will swing between $80 and $90 over the next few days because of the uncertainty surrounding demand growth outlook, and Brent will trade about $12 higher, Shum said.
According to analysts at ANZ, the U.S. benchmark has support at $81, and at $76 after that. The upside is capped at $87 for the moment, the analysts said in a report.
Top oil exporter Saudi Arabia has come under pressure from fellow OPEC producers to cut oil output to prevent a further slide in crude prices.
Price hawks in the Organization of the Petroleum Exporting Countries are fretting that slowing economic growth will send crude, already off $30 since March, plummeting further.
We think that given the economic situation, above all in Europe, there is a serious threat that prices might fall drastically and so our policy is to defend the production ceiling agreed in December, said Venezuelan Oil Minister Rafael Ramirez ahead of the meeting.
Riyadh's preferred oil price is $100 a barrel, a level it feels permits oil investment without hurting economic growth, while most in OPEC want to defend $100 as a price floor.
The upcoming OPEC meeting is unclear whether an agreement would be made about the ideal output level, said Miguel Audencial, sales trader at CMC Markets, in a report.
The outcome of this meeting would be closely watched by oil traders because this would give a very good indication on where the price of oil is headed in the short-to-medium term.
The International Energy Agency (IEA) warned oil prices could move higher again as Iranian exports had fallen steeply in the past months and could slide further, effectively calling on OPEC to maintain current high oil output levels.
Concerns over economic uncertainty in the United States and Europe have dominated oil markets in recent months, often overshadowing supply and demand indicators.
The latest such instance was data from the U.S. Energy Information Administration (EIA) that showed domestic crude stockpiles edged down 191,000 barrels last week, as refiners revved up operations to their highest since 2007.
The drawdown included a fall in crude stockpiles in Cushing, Oklahoma delivery point for U.S. oil futures from a record high, supported by the reversal of the Seaway pipeline.
Prices surged to session highs after the data, only to pare gains on worries about the euro zone's finances and weak U.S. retail sales for a second straight month.
Investors are worried about the outcome of the Greek elections as a win for parties opposing the austerity terms of the bailout would leave the country on the brink of bankruptcy and an eventual chaotic exit from the bloc. That would further deepen the crisis in the region and hurt oil demand.
The euro zone will muddle through, Shum said. There will be no collapse, but neither will there be a major solution.
(Editing by Himani Sarkar)