Oil prices fluctuated as the possibility of an OPEC output cut alleviated demand worries

Oil prices were mixed on Monday as investors weighed the likelihood that the Organization of Petroleum Exporting Countries (OPEC) will reduce output to support prices against the Federal Reserve chairman's statement that the United States will experience a period of sluggish economic growth "for some time."

U.S. West Texas Intermediate (WTI) oil futures rose 2 cents to $93.08 per barrel at 00:03 GMT, extending Friday's gain.

Brent crude futures dropped 27 cents, or 0.3%, to $100.72 a barrel, erasing the prior session's gains.

Powell noted in a speech on Friday that limiting inflation "is likely to require a sustained period of below-trend growth" and would "bring some pain to consumers and companies," which rocked equity markets and strengthened the currency.

In Monday's early trading, the dollar index rose 0.3% to 109.16. A rising dollar is detrimental to the oil market because it raises the price of petroleum for buyers holding foreign currencies.

However, oil prices have been bolstered by statements from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and their allies, known collectively as OPEC+, that they may decrease supply in order to achieve market balance.

Friday, a source familiar with the matter told Reuters that the United Arab Emirates and Saudi Arabia share the same output policy philosophy, while the Omani oil ministry declared that it supports OPEC+ efforts to maintain market stability.

Sources said last week that OPEC would consider decreasing output to offset any increase from Iran should oil sanctions be reinstated if Tehran chose to revive a nuclear accord.

As U.S.-Iran nuclear discussions continue, traders' focus will return to supply and demand, according to CMC Markets analyst Tina Teng.

In a report, experts from ANZ Research claimed that signs of growing demand are also supporting prices, in part due to higher natural gas costs in Europe, which have spurred power generators and industrial users to switch to diesel and fuel oil.