According to Reuters, investors are worried about the ability of politicians in Italy and Greece to push through painful reforms to resolve their debt crises.
Those concerns kept the euro at the bottom of its range for this month and pushed Asian shares lower. Oil also got support from a likely fall in US crude stocks.
Brent crude gained 28 cents to $112.17 a barrel by 0450 GMT, after settling below its 200-day moving average at $111.89. US oil fell 32 cents to $97.82. It fell on Monday after closing at a 15-week high in the previous session.
`Investors are constantly in a risk-on, risk-off mode because of the uncertainty in Europe,` said Natalie Robertson, an analyst at ANZ. `The key thing is to look at Europe. Macroeconomic developments are overshadowing everything else.`
Brent prices may average $113 a barrel in the fourth quarter, while US oil may be $90 a barrel, Robertson said.
The difference between Brent and the US benchmark has narrowed to around $15 a barrel as the economic uncertainty surrounding the euro zone is having a bigger impact on the European benchmark, Robertson said.
The spread will stay around the current level as rising demand in Asia underpin Brent prices even as output of grades linked to the benchmark such as Libya increase, she said.
Brent will fall further to $109.73 per barrel, as indicated by its wave pattern and a Fibonacci projection analysis, while US oil will slide to $96 per barrel after failing a strong resistance at $98.91, according to Reuters market analyst Wang Tao.
Support came from expectations that inventories in the world`s top oil consumer the United States fell for the second straight time on lower imports and higher refinery runs.
On average, US crude stockpiles were forecast down 1.1 million barrels for the week ended Nov. 11, a preliminary Reuters poll of analysts showed on Monday. In the week to Nov. 4, crude stocks in the United States fell 1.37 million barrels to 338.09 million.