Crude prices declined on Monday as there was no strong news of violence from any conflict-hit oil producing countries, while downbeat demand outlook for the commodity added to the reasons to sell it.
Brent crude for spot delivery fell to $107.10, down nearly 1% from Friday's close of $108.17. The commodity has been range-bound between $106.50 and $108.50 for the past two weeks with news of unrest keep pouring from the Middle East and Ukraine.
The shooting down of the Malaysian jet MH17 has led to several international sanctions against Russia, mostly aimed at cutting its oil exports; the world's second largest oil exporter has not seen the outflow fading yet.
The eurozone is planning to expand the sanctions list. EU authorities have sent a letter to the region's leaders directing them to empower their EU ambassadors to make a final decision on that by Tuesday.
Meanwhile, there are reports of fresh fighting from Libya, another oil producer which has been trying to increase its output.
Disputes between Iraq authorities and Kurdistan regarding the latter's intention to trade oil are likely to trigger fresh violence as the Kurds are about to unload a crude cargo off the Texas coast this week.
The broad dollar rally ahead of the US Fed meets to debate monetary policy and other important US releases this week is also weighing on crude oil.
Stronger than expected weekly jobless numbers after the last policy review and a likely rebound in GDP numbers ahead of the rate announcement on Wednesday may lead to a Fed monetary stance tilted more towards the hawkish side, traders expect, and so they are dollar bulls.
The manufacturing PMI data by Markit on Monday has added to the sentiment by coming in at 60.9, topping market consensus of 59.8.
The US dollar index, a gauge that measures the strength of the greenback against currencies of the six largest trading partners of the US, held near the near six-month high of 81.0 touched on Friday.
It had dropped 0.75% in June but rallied 1.6% so far this month.
Brent crude has been on a downtrend since mid-June but the situation after the jet of Malaysia was shot down supported the commodity above $104.50, which is a strong support line for the near term.
It has been practically a zig-zag movement between $106-50-$108.50 over the past week or so and a break below is all likely to get supported near $104.75.
On the higher side, $108.85 and $109.85 are two levels to watch ahead of $110.50.
In the bigger picture, the reversal of the great fall of 2008 is still intact, but for the current trend to gather momentum holding the $104.75 support seems necessary.
As long as that holds, the likelihood of breaking above $117 is possible, and such a move will open doors to $127 and eventually a retest of the mid-2008 peak of $144.
On the downside, a break of $104.75 will expose $98.75 and then $88.50 ahead of $80.50. A farther and stronger line of support will be $69.70.