News on Friday of robust third-quarter economic growth in the United States and a pick-up in Chinese energy use in September helped support prices, but traders kept a high alert for any softening in demand that would ease global supply strains.
US crude slipped 37 cents to $60.85 a barrel, reversing on Friday's mild gain but remaining planted in last week's $60.50-$62.50 closing range.
Prices are down 14 percent from their record high of $70.85 a barrel two months ago. London Brent crude was down 42 cents at $59.00 a barrel.
The Northern Hemisphere winter is dawning at a difficult time for the US oil industry, with refiners and producers still struggling to restore operations after being battered by a succession of Gulf of Mexico hurricanes.
Lost refinery output and high natural gas prices have led to concerns in some quarter that Americans could run short of heating fuel, especially if conditions turn chilly quickly.
"We expect a colder weather in the next two weeks, so heating oil prices and natural gas prices will continue to stay high, and that should support oil prices," said Gordon Wan with CLSA in Hong Kong.
Temperatures in the US Northeast will rise to near or above normal in the next six to 10 days, private forecaster Meteorlogix projected, tempering demand after a spell of below-normal levels triggered a brief spike in prices last week.
Production from the Gulf region, home to more than a quarter of US domestic supply, will not fully recover until the end of March due to extensive damage to platforms and undersea pipelines, said the US Department of Interior.
Some 1.018 million-bpd or 67.84 percent of the US Gulf's 1.5 million-bpd crude production was still shut as of Friday, government figures showed.
On Thursday's rate was 68.15 percent. Four refineries remained shut as of Friday due to damage caused by Hurricanes Katrina and Rita, with a capacity of 1.03 million bpd, or 6 percent, of US refining capacity.
Offsetting worries over tight supplies is the fear that record-high energy prices are curtailing fuel demand, especially in the world's top consumer, the United States.
"If you look at statistics every week, there's a drop in demand year-on-year. People are focusing on that," said Tony Nunnery, a manager at Mitsubishi Corp's risk management.
"That's the big question on everybody's mind, how much this (high prices) affected the demand." But many analysts are wary of the "demand destruction" argument, pointing to data from oil giants such as Exxon Mobil Corp, which reported on Friday a 1.2-percent rise in third-quarter US product sales versus a year ago.
The US economy logged faster-than-expected 3.8 percent annual growth in the third quarter, lending more weight to the idea that $60-plus oil is having only a marginal impact. Oil traders are also monitoring a strike threat at Europe's largest refinery, Shell's 418,000-bpd Pernis plant in Rotterdam, where workers have said they would walk out on Monday afternoon if the management failed to meet their pension demands.
Disruptions to the refinery's operations will have a big impact on the market by reducing the supply of distillates and fuel ahead of winter, traders said.