Oil prices fell in choppy, light trading Tuesday, pressured by the outlook for weak economic growth and petroleum demand, even as the risk of potential crude supply disruptions limited losses.
Global economic growth has slowed this year, curbing fuel demand growth in Asia, Europe and the United States. Investors remain wary, however, of unplanned supply disruptions, especially in the Middle East, that could force prices higher.
The euro strengthened against the dollar a second straight session on growing expectations the euro zone's fourth-largest economy, Spain, will seek a bailout. The dollar index weakened.
U.S. stocks ended mixed amid uncertainty about whether Spain will soon ask the euro zone for support and worries that third-quarter U.S. earnings will disappoint.
Investors remained cautious ahead of this week's U.S. employment gauges. Reports due include payroll processor ADP's measure of private sector hiring, followed by government data on U.S. initial jobless claims and, on Friday, the closely watched September nonfarm payrolls.
Brent November crude fell 62 cents to settle at $111.57 a barrel, trading either side and then closing below the 50-day moving average of $112.06 and the 200-day moving average of $112.09, technical levels that are closely watched by traders.
U.S. November crude pulled back 59 cents to settle at $91.89 a barrel, after reaching $92.94.
Total Brent trading turnover was 26 percent below its 30-day average, while U.S. crude dealings were 38 percent below the 30-day average.
U.S. RBOB gasoline futures fell 1.74 percent, more than 5 cents, to settle at $2.8692 a gallon, finishing below the 100-day moving average of $2.8760.
U.S. heating oil fell just over a penny, less than 0.5 percent, to settle at $3.1255 a gallon.
U.S. retail gasoline demand fell over the past two weeks and demand fell versus the year-ago period, according to a report from MasterCard released on Tuesday.
Crude oil prices drew support on Monday from data showing U.S. manufacturing unexpectedly grew last month for the first time since May. Offsetting the U.S. data were reports showing that euro zone factories suffered their worst quarter since early 2009 and that China lost steam .
"Economic data is bearish for oil and the immediate risk for prices is to the downside," said Tamas Varga, an oil analyst at brokers PVM Oil Associates in London.
"But geopolitics is supporting the market. It may be very unlikely, but investors are still worried there could be a war in the Middle East. And, as long as stories about Iranian nuclear operations keep coming, those worries are not going to go away."
Delayed October loadings for North Sea Forties crude oil cargoes because of lower-than-expected output have also limited the downside for crude futures prices.
GEOPOLITICAL WILD CARDS
The dispute between the West and Iran over Tehran's nuclear program continues to simmer after last week's posturing speeches by heads of state at the United Nations General Assembly.
Analysts and traders also have also focused on OPEC-member Venezuela ahead of Sunday's election as President Hugo Chavez seeks a new six-year term.
Iran has coped with Western economic sanctions, and Iran's central bank has supplied enough hard currency to finance imports even with sanctions cutting oil earnings, President Mahmoud Ahmadinejad said on Tuesday.
Ahmadinejad was speaking after the Iranian rial plunged to a record low against the U.S. dollar earlier in the day.
While Iran's exports remain curbed by a European Union (EU) embargo entering its fourth month, output in neighboring Iraq is likely to hit 3.4 million barrels per day (bpd) while exports are expected to average 2.9 million bpd in 2013, the top energy advisor to the Iraqi prime minister said on Tuesday.
U.S. OIL INVENTORIES
Investors will get the first weekly snapshot of U.S. oil inventories on Tuesday when industry group the American Petroleum Institute releases its report at 4:30 p.m. EDT (2030 GMT).
U.S. crude stocks were expected to have risen 1.5 million barrels last week, a Reuters poll of analysts showed on Tuesday. Gasoline stockpiles were forecast down 600,000 barrels and distillate stockpiles were expected to be lower by 400,000 barrels. (Additional reporting by Christopher Johnson and Alice Baghdjian in London and Luke Pachymuthu and Manolo Serapio Jr in Singapore; Editing by Jim Marshall and Alden Bentley)