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Oil prices reversed losses and edged up on Monday as concerns of tight supply amid lower OPEC output, unrest in Libya and sanctions on Russia outweighed fears of a global recession.

Brent crude futures for September rose 55 cents, or 0.5%, to $112.18 a barrel at 0650 GMT, after falling over $1 in early trade.

U.S. West Texas Intermediate (WTI) crude futures for August delivery gained 44 cents, or 0.4%, to $108.87 a barrel, after also falling $1 earlier.

"Oil fundamentals remain supportive. Strong time spreads point to a tight market and clearly OPEC is still struggling to hit its agreed output levels," said Warren Patterson, head of commodity research at ING.

"The group appears to be battling to maintain current output levels, with production falling over June."

Output from the 10 members of Organization of the Petroleum Exporting Countries (OPEC) in June fell 100,000 barrels per day (bpd) to 28.52 million bpd, off their pledged increase of about 275,000 bpd, a Reuters survey showed.

Declines in Nigeria and Libya offset increases by Saudi Arabia and other large producers, and Libya faces further supply disruption due to escalating political unrest, making the likelihood of OPEC meeting its newly increased production quotas even more unlikely, said ANZ Research analysts in a note.

Libya's exports have dropped to between 365,000 bpd and 409,000 bpd, down about 865,000 bpd compared to normal levels, the National Oil Corp said last week.

In a further hit to supply, a planned strike by Norwegian oil and gas workers this week could cut the country's oil and condensate output by 130,000 bpd.

Fears of a global recession however are seen capping oil's price gains, said CMC Markets analyst Tina Teng.

"Rising rates and a plunge in consumer confidence have dented the fuel demand outlook, while data shows that the U.S. petroleum refinery capacity has improved," she said.

"In addition, a strong USD also weakens broad commodity markets, including crude prices."

U.S. consumer sentiment dropped to a record low in June despite a marginal improvement in the outlook for inflation, as the Federal Reserve said its commitment to reining in inflation was "unconditional" and increasing concerns of interest rate hikes.

Traders will be watching out for official prices for August from top oil exporter Saudi Arabia for signs of how tight the market is, with refiners bracing for another sharp increase close to the record set in May.

Nine refining sources surveyed by Reuters expected Saudi's flagship Arab Light crude official selling price could rise by about $2.40 a barrel from the previous month.