After strengthening, the dollar index weakened, supporting dollar-denominated oil to help push US crude higher as the April contract approaches its Tuesday expiration and narrow the premium of May Brent to its US counterpart.
Iran has agreed to a new round of talks with the West, but Western sanctions against Tehran have affected oil exports.
Concerns that a military strike on Iran's nuclear facilities would severely restrict supply continue to keep oil investors wary.
"Iran as a supply risk is supporting prices and weaker demand, rising production and physical oversupply is weighing on prices, so it is keeping prices rather stable in this narrow range," said Carsten Fritsch, commodity analyst at Commerzbank.
Brent May crude fell 26 cents to $125.55 a barrel at 1:49 pm EDT (1749 GMT).
Earlier it fell to $124.82, just below the 10-day moving average of $124.88.
US April crude rose 71 cents to $107.77 a barrel, having swung from $106.55 to $108.09, testing below the 20-day moving average of $106.85 intraday.
The April contract expires at the end of Tuesday's session.
US May crude also rose.
Brent's premium to US crude narrowed to less than $18 a barrel.
Total crude trading volumes were light, with both Brent and US turnover more than 40 percent under their respective 30-day averages after midday in New York.
US gasoline futures rose, supported by news that Valero Energy Corp will halt operations at its 235,000-barrel-per-day Aruba refinery.
It is the second time since 2009 that the plant has been shut because of low profit margins.
Lack of comment from PBF Energy on Monday regarding the status of its Delaware City, Delaware, refinery after a Friday fire in the plant's desulfurization unit added to support for gasoline and the oil complex, traders and analysts said.
Part of the facility affected by the fire has been restarted, according to an industry source.
Libya plans to export almost 1.4 million bpd of crude oil in April, a senior National Oil Corp (NOC) official said, exceeding deliveries in February 2011 before the uprising that ousted Muammar Qadhafi.
The return of Libya's exports and increased supply from Saudi Arabia are expected to be key for customers seeking to replace sanctioned or embargoed Iranian barrels.
Fears of a supply disruption in the region, as negotiations between the West and Iran over Tehran's disputed nuclear program start, sputter and restart, have kept crude oil prices elevated in this year.
Saudi Arabia's oil exports rose 143,000 barrels bpd in January month-on-month, according to government data published Sunday.
Total production rose 61,000 bpd to 9.871 million bpd in January.
Addressing any threat of interrupted oil tanker traffic in the Strait of Hormuz if the West's dispute with Iran erupts, Iraq has approved a plan to expand its oil export routes by adding capacity from its northern fields and building a pipeline to ship oil from southern fields to Turkey.
Oman, located strategically on the opposite side of the Strait of Hormuz from Iran, said over the weekend that the risk of military conflict between Tehran and the West was rising but there was still plenty of opportunity to negotiate peace.
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