Oil lower in choppy trading; Euro zone issues weigh

Mon Aug 20, 2012 5:07pm EDT
 
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices slipped on Monday in choppy trading as investors worried about the European Central Bank's ability to address the euro zone debt crisis, while tight North Sea supplies and Middle East turmoil limited losses.

Crude futures pared gains when the German Bundesbank reiterated opposition to European Central Bank bond buying and when the ECB brushed aside a report in Germany's Der Spiegel magazine about the form of market intervention the central bank might take to contain the region's debt crisis.

"The ECB bond buying plan looks to be in jeopardy again after those Bundesbank comments and that limited the earlier bullish sentiment," said John Kilduff, partner at Again Capital LLC in New York.

Prices continue to be buffeted as potential geopolitical threats to supply and infrastructure maintenance provided support. Tepid demand, signs of slowing economic growth and talk of strategic reserve releases tempered gains.

Brent October crude fell 1 cent to settle at $113.70 a barrel, having swung from $112.87 to $114.70.

Brent hit a three-month peak at $117.03 last Thursday as its September contract headed to expiration and went off the board at $116.90 a barrel, the highest settlement since May 2.

But Brent prices fell back in post-settlement trading on Thursday and settled lower on Friday after a source said the White House might tap the U.S. Strategic Petroleum Reserve to prevent high energy costs from undermining the success of sanctions against Iran.

U.S. crude edged lower on Monday, also in choppy trading, snapping a string of four straight sessions of gains ahead of the front-month September contract's expiration on Tuesday.   Continued...

 
Gas pumps are seen at a petrol station in Prague May 10, 2012. REUTERS/David W Cerny