Oil dips on euro zone worry, North Sea supports

Mon Apr 23, 2012 5:19pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil edged lower on Monday on pressure from revived concerns about a euro zone economic slump and political uncertainty, while a North Sea production problem and worries about Iran and potential supply disruptions limited losses.

Euro zone business contraction deepened at a faster pace than expected in April, with the Purchasing Managers Index for the bloc's dominant service sector falling to a five-month low, against forecasts that it rose.

Politics added to the uncertainty after the Socialist challenger edged out French President Nicolas Sarkozy, leaving the two to fight a May 6 election run-off, and the Dutch government was set to resign in a crisis over budget cuts.

The signs of euro zone economic and political turmoil sparked a "risk-off" trade, pushing global equities, the euro and key industrial feedstock copper lower and sending investors in the direction of perceived safe-haven assets such as the dollar and U.S. Treasuries.

Production stopped at the North Sea Buzzard oil field, Britain's largest, following a problem with a gas compressor over the weekend. Output is expected to "ramp up" over the next 24-48 hours according to a spokeswoman for operator Nexen NXY.TO.

"The North Sea Buzzard news helped pull Brent off its lows and probably kept it from dropping as much as U.S. crude," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Brent June crude slipped 5 cents to settle at $118.71 a barrel, having fallen to $117.21 intraday but finding support ahead of a test of 100-day-moving-average support at $116.55.

Front-month Brent has not been below the 100-day moving average since late January.   Continued...

A motorist prepares to put fuel into her car at a petrol station in Melbourne July 3, 2008. REUTERS/Mick Tsikas