LONDON: Brent crude was subdued below $119 on Tuesday due to weak demand amid the delicate state of the euro zone economy.
Prices, however, trimmed earlier losses following the Dutch bond sales.
Brent crude futures fell 15 cents to $118.56 a barrel by 0840 GMT, having dropped to as low as $118.32 earlier. US crude futures turned positive, trading 11 cents higher at $103.22.
"(There are) worries about growth in China, weak stock markets and especially the continuing difficulties in the euro-zone," said Christopher Bellew, broker at Jefferies Bache.
Investor sentiment in Europe has remained fragile as Brent price has fallen almost 6 percent since the intraday high of $125.97 on April 3.
The Dutch state successfully sold two bonds at an auction, raising 2 billion euros, a day after the government collapsed in a crisis over budget cuts.
"That may have a very short term impact," Andy Sommer, oil market analyst with EGL in Switzerland, said. "But for the mid- and long-term, we have not changed our view. The market is still underlined by the weak fundamentals. There are more downside risks."
On Monday, data showed euro zone's business slump deepened at a far faster pace than expected in April, suggesting the economy will stay in recession at least until the second half of the year.
"The main dangers to the situation in Europe have been on display over the past couple of days, and these include political support for populist anti-reform economic agendas and inadequate economic growth against a background of fiscal austerity," said Ric Spooner, chief market analyst at the Sydney-based brokerage CMC Markets.
Oil prices were, however, supported by supply concerns stemming from a production stoppage at the North Sea Buzzard oil field, Britain's largest, and worries over exports from Iran ahead of the EU ban on importing its oil from July 1.
"It is significant that in the face of recent bearish development, oil is holding above the lows of last week," Bellew said.
Later on Tuesday the market focus was expected to shift to the United States, the world's second largest energy consumer.
US crude stockpiles were expected to have risen last week, a Reuters survey of analysts showed. The American Petroleum Institute (API) will release its report on at 2030 GMT on Tuesday. The US government's Energy Information Administration (EIA) will issue its data on Wednesday.
The US Federal Reserve's two-day policy meeting that begins later in the day to gauge the central bank's attitude towards further monetary stimulus.
