Oil prices rose modestly Tuesday after news of a drop in OPEC production in November and ahead of the wrap-up of a US Federal Reserve policy meeting, expected to expand its "QE" bond purchase operations.
New York's main contract, West Texas Intermediate (WTI) for delivery in January, edged up 23 cents from Monday's close to $85.79 a barrel.
In London trade, Brent North Sea crude for January added 68 cents at $108.01 a barrel.
Trading was choppy as operators waited for the outcome of the Organization of Petroleum Exporting Countries meeting Wednesday at the cartel's headquarters in Vienna, Austria, said Bill Baruch of iiTrader.
The 12-nation oil cartel, which pumps 35 percent of global demand for crude, said Tuesday that its production fell by 210,000 barrels per day in November.
OPEC left its 2012 and 2013 oil demand forecasts unchanged from the prior month.
Market sentiment also got a lift from an upbeat indicator in Germany, Europe's largest economy.
"Sentiment was boosted after the latest German ZEW survey showed its highest reading since May and as fears about Italy eased a touch," said Fawad Razaqzada of GFT Markets.
Crude prices later erased most of their gains following the release of weak US trade numbers for October that suggests both domestic and international demand remains weak, Razaqzada said.
"But with the Fed's last policy statement of the year due tomorrow, traders are unwilling to take on bold positions," he said.
Analyst expect the Fed will announce an additional purchase of $45 billion bonds each month and allow the Operation Twist program to expire as scheduled at year-end.