A drop in German industrial output in November served as a reminder that even the European Union's economic powerhouse faces challenges, though Germany's exports rose in the same month.

Euro zone retail sales fell and economic sentiment soured at the end of 2011 and along with data showing a rise in unemployment added to the caution about prospects for the region's economy.

Germany and France warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap.

Iran's threats to block the Strait of Hormuz if sanctions reduce Tehran's oil exports continued to limit oil price losses after Iran confirmed it had started uranium enrichment at its Fordow nuclear plant.

"Overall, the geopolitical premium is supporting amid tensions with Iran, but on the other hand the price of crude in euros remains high and will hurt demand in Europe," Olivier Jakob from Zug-based consultancy Petromatrix said.

Brent February crude fell 69 cents to $112.37 a barrel by 12:18 p.m. EST (1718 GMT), back under its 200-day moving average of $112.72 after gaining more than 5 percent the previous week.

US February crude fell $1 to $100.56 a barrel, testing support above the $100 level after dropping to $100.10.

Crude trading volume continued last week's more robust levels following reduced holiday and year-end volumes. Brent volume was outpacing US turnover during the noon hour in New York.

The euro rebounded from a 16-month low against the dollar but also saw choppy trading as investors pared short positions but remained bearish eyeing euro zone developments.

Europe's debt crisis and the troubles addressing it also weighed on prices for key industrial feedstock copper.

US stocks on Wall Street seesawed as financial and technology shares gave up some early strength.

Nigeria, OPEC member and Africa's top oil producer, continued to be watched as thousands of people took to the streets to protest the end of fuel subsidies.

Nigeria's crude oil output averages 2 million barrels per day (bpd) and production remained normal despite the strike, sources at two international oil companies and the state firm told Reuters.

Top exporter Saudi Arabia pumped 9.8 million bpd in December, down from 10.05 million bpd the previous month, an industry source said.

The reduced output increases the spare capacity available to Saudi Arabia to meet any supply disruptions resulting from Iran's moves or Nigerian turmoil.

Brokers and analysts also cited the reweighting of the world's biggest commodity indexes, the S&P GSCI Index and the DJ-UBS Index, as supportive to Brent and a source of volatility this week.

This involves funds selling off more than $6 billion worth of US crude futures and buying more than $5.4 billion of Brent crude, analysts estimated.

Anticipation of the previously announced index reweighting was cited as a factor in the causing Brent/WTI spread to widen by nearly $3 a barrel last week to near its widest point since mid-November.

Brent's premium to its US counterpart also had a choppy trading trajectory on Monday, but remained above $11.50 a barrel.