London - Oil steadied around 115 dollars a barrel on Tuesday as investors weighed further stimulus action by the U.S. Federal Reserve against plentiful supplies of oil.
Some analysts believe the central bank will launch a third round of bond-buying due to recent weak U.S. economic data.
Additional stimulus would likely weaken the dollar and boost the price of dollar-denominated commodities like oil.
But abundant supplies of oil are likely to keep a lid on prices.
The Organization of the Petroleum Exporting Countries said its output had risen by 254,000 barrels per day last month, despite the July 1 start of a European Union ban on Iran's oil exports.
Saudi Oil Minister Ali al-Naimi said on Monday the Kingdom was concerned about climbing oil prices, with Brent rising by more than 25 per cent since late June.
"The high oil price is thus coming under fire both from the U.S., the largest consumer of oil, and from Saudi Arabia, the biggest exporter, which is likely to preclude any increase in prices," said a Commerzbank in a research note.
"That said, speculation about the announcement of renewed bond purchases at this week's meeting of the Fed should also ensure that prices do not fall."
Brent crude was trading 13 cents lower at 114.68 dollars a barrel , after settling up 56 cents on Monday. U.S. crude was up 11 cents at 96.65.
French bank Societe Generale said in a note it expected base and precious metals prices to outperform oil and grain prices over the rest of the year, with scope for Brent to back down towards 100 dollars over the coming months.
Maintenance in the North Sea, where Brent crude is produced, has cut output this month and lent support to oil prices in the near term, along with the disruptions to U.S. Gulf of Mexico production after Hurricane Isaac.
U.S. crude oil and fuel inventories likely dropped last week, according to a Media survey of analysts on Monday, with imports and production having only just begun to recover after the interruption from Isaac.
Market participants were also waiting for weekly petroleum data issued by the American Petroleum Institute.