Brent crude seesawed near unchanged on Monday, barely clinging to gains after rallying more than $1 when a bailout deal for Cyprus improved the outlook for fuel demand in the euro zone.
U.S. crude futures also pared increases, but their rise outpaced Brent and narrowed the spread between the two contracts to less than $13 a barrel. Brent's premium to its U.S. counterpart fell to its lowest since early July 2012.
Brent briefly turned lower and then seesawed after comments from the chief of the Eurogroup of euro zone finance ministers dampened investor enthusiasm that had pushed oil and share prices higher after the deal to help Cyprus.
The rescue agreed for Cyprus represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup, said.
The strength of the dollar helped keep oil's rally in check. The euro slumped against the U.S. currency after Dijsselbloem's comments caused initial enthusiasm stemming from the Cyprus deal to give way to caution.