US oil prices settled slightly lower Monday in tandem with the euro after a volatile day of trading set against the backdrop of the Italian election.
In the end, US benchmark West Texas Intermediate (WTI) settled at $93.11 a barrel in New York, down two cents from Friday's level.
European benchmark Brent futures closed at $114.44 in London, up 34 cents from Friday.
Oil spent much of the morning trading in positive territory as the center-left appeared poised for a victory in the Italian election. That sent the euro higher against the dollar and gave a lift to equity markets. WTI reached as high as $94.46 a barrel.
But as the hours passed, a tight contest for control of the Italian Senate raised the possibility that a coalition government might be needed. Financial markets fear that a return to power of former premier Silvio Berlusconi could endanger Italy's recent fiscal reforms.
Berlusconi was running neck-and-neck with Democratic party leader Pier Luigi Bersani in the Senate vote.
"We're in the dollar up, crude lower mode," said John Kilduff, a trader at Again Capital. "The currency influences are great at the moment."
Trading in oil sometimes tracks currency movements because oil is traded in dollars. When the dollar is weak, crude sometimes rallies because oil becomes cheaper to consumers in other currencies. But when the dollar is strong, the opposite is true.
By the afternoon, as uncertainty about the Italian election deepened, the dollar was higher and the euro and oil were both lower. Oil traded as low as $92.69 a barrel before recovering somewhat.
"Those markets, equities and currencies, are running crude around," said Rich Ilczyszyn of iiTrader.com.
The oil market also was readying for several news events later this week that could shift the market, including international talks over the Iranian nuclear program and Federal Reserve Chairman Ben Bernanke's testimony to Congress Tuesday and Wednesday's weekly government report on US oil inventories.
Some analysts expect a bearish result from this week's inventory report owing to heavy refinery maintenance.
"As long as refineries are down for maintenance, crude is going to build," said Carl Larry, a broker at Atlas Commodties LLC.