Brent crude rose above $111 a barrel in choppy trading on Monday as a weaker dollar provided support, while U.S. crude prices fell as a pipeline leak in Arkansas threatened to increase the glut of oil in the U.S. Midwest.
Disappointing economic data from Asia and the United States raised concerns about petroleum demand and weighed on crude prices on both sides of the Atlantic during Monday's session.
A leak shut an Exxon Mobil pipeline carrying crude oil from the U.S. Midwest to Texas on Friday, potentially trapping more Canadian and U.S. crude oil production in the Midwest.
"(U.S.) futures are lower on news that Exxon Mobil shut its 96,000-barrel per day Pegasus pipeline in Arkansas due to a leak," Addison Armstrong, an analyst at Tradition Energy said in a note to clients.
U.S. crude prices have recently been lifted, and the price difference to Brent narrowed, because of increased ability to move rising crude supply out of the U.S. Midwest to the Guld Coast refining center.
This had led to traders selling Brent and buying U.S. crude futures.
Brent crude futures rose $1.09 to $111.11 a barrel in late trading, having risen above the 200-day moving average of $110.05.
On Thursday, Brent ended the first quarter down one percent.
U.S. light, sweet crude rose nearly 6 percent in the first quarter.
Kicking off second-quarter trading on Monday, U.S. May crude was down 27 cents at $96.96 a barrel, after hitting a six-week high of $97.80 during the session.
The spread between Brent and the U.S. light sweet crude contract, also known by its benchmark West Texas Intermediate (WTI), also saw choppy trading on Monday.
Brent's premium to WTI rallied back above $14 a barrel after slipping to $12.32, the narrowest spread since July.
Trading in both Brent and WTI was shut on Friday ahead of the Easter holiday.
China's official purchasing managers index (PMI) came in at 50.9, the highest in 11 months, but economists expected bigger recovery from February's five-month low.
Optimism as the second quarter started also was curbed by a slightly weaker-than-expected outcome of the Bank of Japan's Tankan survey of business sentiment for March.
"The data came in below market expectations, which could indicate that oil demand growth may not expand quite as quickly as we would like it to," said Carl Larry, president of Oil Outlooks and Opinion, based in Houston.
"But China's still growing, and that continues to be an underlying support factor long term for the market. Whether they are at 6 percent or 7 percent, they are growing."
Data showing the pace of expansion in the U.S. manufacturing sector slowed in March and weaker equities on Wall Street also weighed on U.S. oil prices on Monday.
This week will be rich in economic reports, including euro zone unemployment data due on Tuesday and U.S. March nonfarm payrolls data due on Friday.
Analysts said concerns about crude supplies getting from the U.S. Midwest to the U.S. Gulf Coast were helping widen the spread between Brent and U.S. crude futures on Monday after Exxon Mobil was forced to close a pipeline late on Friday because of a leak.
Exxon's Pegasus pipeline can carry more than 90,000 barrels per day (bpd) of crude from Illinois to Texas.
Also on Friday, Shell Pipeline, a unit of Royal Dutch Shell Plc, shut its West Columbia, Texas, pipeline after alarms of a possible leak.
Brent and its premium to U.S. crude could come under pressure when South Korea closes a tax loophole seen as encouraging imports of North Sea crude.
But the tax change is to be implemented in July, later than originally expected.
Saudi oil minister Ali al-Naimi said on Monday he saw demand for Saudi crude exports rising over the next few months.
Oil investors also will monitor the continuing wrangling over Iran's controversial nuclear program.
"The coming weekend will bring a major price risk, with the next round of negotiations in Almaty between the P5 1 (the five members of the U.N. Security Council plus Germany) and Iran," Olivier Jakob at the Petromatrix consultant said, adding that progress in nuclear talks would put downward pressure on oil prices.