Oil traded narrowly lower, then higher, in nervous, choppy business on Tuesday ahead of a U.S. Federal Reserve policy meeting that could signal a change in the country's easy monetary policy.
Prices were also caught between the impact of contrasting remarks over the economic impact of high oil prices from the world's top oil exporter Saudi Arabia, which voiced concern, and the top energy consumer the United States, which said current levels did not pose a risk.
By 1441 GMT, North Sea Brent crude futures were 50 cents up at $124.16 a barrel, having briefly turned negative.
U.S. crude futures were trading 20 cents higher at $112.48 a barrel.
Analysts said they expected some investors would rely on technical indicators to take profits from short-term trading and the price range might remain very narrow until the Fed meeting wraps up on Wednesday.
This week, it will be all about the Fed meeting. Volume and volatility will come back after the meeting, said Olivier Jakob of Petromatrix in Switzerland.
Investors were focused on the meeting, due to start later on Tuesday, particularly since Ben Bernanke is to give the first regularly scheduled news briefing by a Fed chief in the bank's 97-year history following its decision on Wednesday.
The dollar fell to a 16-month low against the euro.
SAUDI ARABIA CONCERNED
Oil prices have surged this year due to conflict in oil producer Libya and unrest in other countries in North Africa and the Middle East.
Brent crude was around $86 a barrel in late April last year.
A senior official with Saudi Arabian state-run firm Aramco voiced concern over high oil prices.
We are not comfortable with oil prices where they are today ... I am concerned about the impact it could have on the global economy, Khalid al-Falih, Aramco's chief executive, told an industry gathering in Seoul.
Saudi Arabia has enough capacity to meet any spike in demand and plug short-term outages in supply, and there is no tightness in global oil markets, Falih said.
His comments echoed Saudi Oil Minister Ali al-Naimi, who said last week that the kingdom had cut oil output in March as the market was oversupplied.
On the other hand, U.S. Treasury Secretary Timothy Geithner said the current level of oil prices would not endanger global economic recovery.
At current levels, on its own, it won't put the recovery at risk, Geithner told an event sponsored by the Council on Foreign Relations.
At 2030 GMT, U.S. oil industry group the American Petroleum Institute (API) will issue its weekly oil data, followed by the Energy Information Administration on Wednesday.
Analysts forecast the data to show a rise in crude oil inventories.
(Additional reporting by Manash Goswami and Florence Tan in Singapore, editing by Anthony Barker)