Oil prices fell on Monday, with traders cautious ahead of the Group of 20 leaders' meeting later this week that will focus largely on the European debt crisis. Euro zone leaders reached a deal last week to recapitalize their banks, strengthen the euro zone rescue fund and impose hefty losses on holders of Greek debt, and the market was looking for more positive news out of the euro zone to provide a floor for prices.
"I think at the moment we're riding on the back of optimism created from the euro zone plan. In order for prices to stay at this level, the optimism must continue," Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said.
"The key will be this optimism out of the EU. It doesn't translate into demand today and probably not even tomorrow, it's just that mere fact that a plan is at hand is buoying prices."
Brent crude fell 50 cents to $109.41 a barrel by 0159 GMT after closing at 109.91 on Friday.
U.S. crude fell 26 cents to $93.06 per barrel.
High oil prices at $100 or more will derail global economic growth, just as the 2008 financial crisis did, Nobuo Tanaka, former executive director for the International Energy Agency (IEA), said on Monday. He was speaking at the Singapore International Energy Week (SIEW) conference.
Over the weekend, Spain and Portugal called for the United States and other G20 powers to take action to help contain the fallout from the European debt crisis at the G20 summit, which will take place in Cannes, France, on November 3-4.
British Prime Minister David Cameron, writing in the Financial Times on Monday, urged colleagues at home and abroad to avoid talking down domestic and global economic prospects.
Many Britons are worried they may have to contribute financially to easing the euro zone debt crisis and suspicious that a European super-state will exert increasing control over their lives.
In the United States, mixed economic data did little to support oil prices. Sluggish income growth made U.S. households cut back on saving in September to raise their spending, though a separate report showed consumer morale in the world's largest economy brightened in October.
The market was also eyeing weather in the U.S. Northeast, which was hit with an early winter storm, leaving more than 3 million households without power on Sunday and killing at least eight people.
A cooler winter in the world's top oil consumer could bolster global energy prices, but the early storm was viewed largely as a fluke.
"For all intents and purposes, we're still meant to get a coolish winter, but nothing too much of an extreme and so far this seems to be just a little bit of an aberration on that," Barratt said.