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.
U.S. September crude fell 4 cents to settle at $95.97 a barrel, falling as low as $95.02, but only after reaching $96.53, highest price since May 11.
Summer trading continued to be thin, with Brent volume lagging its 30-day volume by 30 percent and U.S. turnover down 20 percent from its 30-day average.
U.S. gasoline and heating oil futures managed minimally higher settlements, as refinery problems and the transition from summer to winter specification fuel supported fuel prices.
Germany's Bundesbank remains opposed to a ECB plan to buy billions of euros worth of Spanish and Italian government bonds to reduce those countries' crippling borrowing costs.
The powerful Bundesbank is keeping up its opposition even after Germany's political leaders voiced some support for the ECB's crisis-fighting strategy.
Britain's largest oilfield, Buzzard will shut and suspend output until mid-October and production from key North Sea oilfields is due to fall by about 17 percent in September, helping push up prices for nearby crude.
But the production slide should be temporary and traders expect supply tightness to ease after the maintenance is completed.
"Renewed talk of Brent market tightness with the Buzzard field coming offline ... is limiting the downside, at least so far," Timothy Evans, energy analyst for Citi Futures Perspective, said in an email to clients.
Investors await weekly reports on U.S. oil inventories, with crude stocks expected to be near unchanged, up only 100,000 barrels, according to a Reuters poll of analysts on Monday. <EIA/S>
Syria's civil conflict and Iran's contentious dispute with the West over Tehran's nuclear program supported oil prices.
United Nations military observers left Damascus on Monday after a four-month mission to monitor a ceasefire between President Bashar al-Assad's forces and rebels, even as battles hit Damascus suburbs on Monday.
The European Union's embargo on Iranian oil is midway through its second month, part of the sanctions that the West hopes will pressure Tehran to suspend its nuclear program.
Additional reporting by Christopher Johnson in London; Editing by David Gregorio, Marguerita Choy, and Bob Burgdorfer