Oil fell to nearly US$99 a barrel yesterday in Asia amid fresh concerns the eurozone may refuse to grant Greece a fresh bailout.
Benchmark crude for March delivery was down 42c at US$99.14 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 14c to finish at US$99.56 on Friday.
Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said crude prices were volatile after Germany's finance minister warned the eurozone might not give Greece a fresh bailout unless it can overhaul its state and economy.
Analysts fear this could reignite the region's debt crisis.
European leaders were to meet overnight in Brussels to discuss austerity measures and a tentative deal reached on Saturday between Greece and its private investors to avert a disastrous Greek default on its debt.
Shum said supply concerns also weighed on the market although Iran has postponed plans to immediately cut the flow of crude oil to Europe in retaliation for EU sanctions over its nuclear programme.
Iran also threatened to close the Strait of Hormuz, a vital oil passage, and the head of its national oil company warned on Sunday that EU sanctions could push oil prices up to between US$120 and US$150 a barrel. The market is also awaiting a report from an International Atomic Energy Agency team that is touring Tehran, Shum said.
"Trade has been flat. The geopolitical tension in Iran and concerns over Greece's debt default are driving oil in different directions. This has helped oil to hold steady," he added.
In other energy trading, heating oil rose 1c to US$3.07 a gallon but petrol futures were steady at US$2.92 a gallon. Natural gas added 7c to US$2.82 per 1000 cubic ft.