Brent futures held around $108 a barrel on Friday, as uncertainties surrounding the global economic outlook weighed on prices, while a showdown between Israel and the Palestinians stoked worries about supply.
Oil investors are worried that Arab producers may be drawn into any possible Israeli-Palestinian conflict, which may hurt their supply lines. Brent has held above $100 for most of this year on fears of disruption from the Middle East with a weak demand outlook capping further gains.
Brent crude gained 8 cents to $108.09 a barrel by 0714 GMT. The December contract, which expired on Thursday, settled up $1.37 and the more actively traded January dipped 47 cents. US oil fell 12 cents to $85.33.
"The global economy has got issues and geopolitical tensions, particularly in the Middle East, are rising," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm. "That means a status quo for the oil market for some time."
Barratt expects the U.S. contract to be at around $93 a barrel till the end of the year and Brent at $115.
An oil market trading in a tight range may be good for the global economy struggling to revive growth because that would mean stable prices of a key input, Barratt said.
"People aren't chasing it, people aren't selling it - and that means a stable primary input price," he said.
Brent may consolidate in a range of $107.39-$108.20 per barrel for one trading session before seeking its next direction, while signals are mixed for U.S. oil as the drop on Thursday has disrupted a rebound from the Nov. 7 low of $84.05, according to Reuters technical analyst Wang Tao.
The unrest in the Middle East has resulted in Brent futures rising more than the U.S. benchmark, which is weighed down by US-centric factors such as higher inventories, weak demand growth outlook and a potential financial crisis.
