June 4, 2012 / 2:53 AM / in 5 years

Brent crude slips, but off low as euro rises

NEW YORK (Reuters) - Brent crude prices fell on Monday, still feeling pressure from concerns that slowing U.S. and Chinese economies and the euro zone crisis will curb petroleum demand, but having recovered from a 16-month low hit early in the session as the euro rose against the dollar.

A worker is silhouetted as he walks past fuel storage tanks at an oil refinery in Melbourne June 21, 2010. REUTERS/Mick Tsikas

U.S. crude futures seesawed near unchanged after turning higher near the start of open outcry trading in New York.

The euro strengthened and European equities rose after last week’s batch of grim global economic data fueled hopes that there is a greater likelihood of central bank policy action to stimulate growth and optimism that European leaders will fashion a plan to ease the region’s debt crisis. <USD/> .EU

“Europe’s stock market stabilized, and the euro bounced and the dollar weakened, on the hope there will be central bank stimulus to stop the bleeding and that pulled crude off the early lows,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Finance ministers and central bank governors of the Group of Seven (G7) industrialized nations will hold a conference call on Tuesday morning to discuss the European debt crisis, a spokeswoman for Canadian Finance Minister Jim Flaherty said.

Leaders from the larger Group of 20 leaders will meet in Mexico June 18-19, with Europe likely to dominate the agenda.

Brent July crude fell 60 cents to $97.83 a barrel by 12:48 p.m. EDT (1648 GMT), down a fifth straight session and dropping as low as $95.63, the lowest intraday price since January 26, 2011.

U.S. July crude was unchanged at $83.23, also down a fifth day. Prices fell to $81.21 intraday, the lowest since prices were last under $80 a barrel on October 6, 2011.

Total Brent crude volumes lagged U.S. crude turnover, with a British bank holiday thinning trade. Volumes for both contracts were well below the 30-day averages.

Last week’s news that U.S. job growth stumbled in May, the jobless rate rose for the first time in nearly a year and data from No. 2 oil consumer China indicated a slowdown in its manufacturing sector combined to send oil prices reeling.

Brent posted a 7.86 percent weekly loss and U.S. crude fell 8.4 percent as oil posted fifth consecutive weekly drops on both sides of the Atlantic.

Oil prices have fallen back after Brent rallied above $128 a barrel in March, the highest since 2008.

That rally was supported by concerns about supply disruptions as sanctions on Iran tightened and the negotiations with the West over Tehran’s nuclear program drag on ahead of a European Union embargo set for July.

The threat to economic growth from high oil prices spurred consumer countries to consider releasing strategic reserves and prompted top exporter Saudi Arabia to raise production in an effort to bring prices back to $100.

The higher Saudi production, along with rising output from Iraq and post-Gaddafi Libya, helped crude oil stockpiles rise in the United States and eased worries about loss of Iranian barrels.

IRAN, IAEA MEET THIS WEEK

The U.N.’s International Atomic Energy Agency (IAEA) and Iran are set to hold a second round of talks on Friday in Vienna and Yukiya Amano, IAEA director general, said he hoped the parties could finalize an agreement enabling U.N. inspectors to resume the investigation into Tehran’s nuclear program.

Amano said satellite images indicate buildings are being demolished and soil removed at Parchin, an Iranian military site the IAEA wants to visit.

Iran and the six powers - the United States, France, Russia, China, Germany and Britain - will meet for a third time this year in Moscow on June 18-19 after making little progress on the dispute at their most recent meeting in Baghdad last month.

Additional reporting by Ikuko Kurahone in London and Randy Fabi in Singapore; Editing by Marguerita Choy

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