Oil prices fell on Tuesday in choppy trading on revived concerns about the euro zone region's debt problems and their potential to slow the global economy, even as tensions between Iran and the West helped limit losses.
Europe's policymakers are struggling to come up with a plan to prevent a Greek default, which would harm the global economy and depress demand for energy.
Europe's debt situation weighed on European equities and the euro, helping to lift the dollar index. A stronger greenback tends to depress dollar-denominated oil prices.
President Barack Obama said the United States would continue to impose new sanctions on Iran over Tehran's disputed nuclear program after the European Union agreed on Monday to ban imports of Iranian crude starting in July.
Iran reiterated its threat to shut the Strait of Hormuz oil-shipping route if the EU sanctions affect the country's oil exports, and the potential for disruptions to supplies from the region continues to limit losses in oil prices.
"Crude oil prices are lower on the back of softer equities and a weaker euro on fresh worries over Greek debt," Tim Evans, energy analyst at Citi Futures Perspective, said in a note.
Brent March crude fell 48 cents to $110.10 a barrel by 1 p.m. EST (1300 GMT), after reaching $111.11. It fell to $109.70 intraday, above front-month Brent's 100-day moving average (MA) at $109.55.
Brent's 50-day MA at $109.36 and the 300-day MA at $109.28 also might be supportive on the way down to $109.
U.S. March crude fell 70 cents to $98.88 a barrel, below the front-month 50-day moving average of $99.19.
Crude futures trading volumes remained light. Brent's volume was 13% below its 30-day average and U.S. turnover was 42% below its 30-day average just after midday in New York.
U.S. heating oil futures, the benchmark distillate contract, rose slightly and U.S. gasoline seesawed in spite of recent increases in the nation's inventories and the unseasonably mild winter season in most of the country.
"Products are seeing some support, however, as European independent Petroplus moves into bankruptcy," Evans said.
Swiss-based oil refiner Petroplus said it was filing for insolvency after it defaulted on $1.75 billion of debt, as a result of thin refining margins and its private equity-backed business model.
Europe's largest independent refiner by capacity has already stopped three refineries in Switzerland, France and Belgium and plans to begin shutting down another in England by the end of the week.
Some caution from investors was expected as the U.S. Federal Reserve opened a two-day meeting on Tuesday that was expected to end with a signal that interest rates will be held near zero into 2014.
Continuing the low-interest rate policy would be supportive to commodities prices that benefit from the increased liquidity provided by the inexpensive borrowing costs.
U.S. OIL INVENTORIES
U.S. crude stockpiles were expected to have increased last week, according to a Reuters survey of analysts on Monday. Gasoline stockpiles also were expected to be up, while total distillate stocks were seen near flat.
Investors receive a fresh snapshot of U.S. commercial oil inventories starting with data from industry group American Petroleum Institute on Tuesday, followed by the government's report on Wednesday.
