Oil slips on revived euro zone debt concern

(Reuters) - Oil prices fell on Tuesday on revived concerns about the euro zone's debt problems and their potential to slow the global economy, but 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.

Euro zone finance ministers on Monday rejected as insufficient an offer made by bondholders to help restructure Greece's debts, sending negotiators back to the drawing board and raising the threat of a default.
"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 55 cents to settle at $110.03 a barrel after reaching $111.11. It fell to $109.70 intraday, above front-month Brent's 100-day moving average (MA) at $109.55 and with the 50-day MA at $109.36 and the 300-day MA at $109.28 awaiting below as tests of support.
U.S. March crude fell 63 cents to settle at $98.95 a barrel, below the front-month 50-day moving average of $99.19.
Total Brent trading volume was 9 percent above its 30-day average, while U.S. turnover was 14 percent below its 30-day average. Both were below half million lots traded with 20 minutes left in post-settlement trading.
EURO ZONE THREAT TO GROWTH
The euro zone debt crisis is escalating and could derail the global economic recovery, the International Monetary Fund warned.
Europe's debt situation weighed on European and U.S. equities and the euro, helping to lift the dollar index .DXY. A stronger greenback tends to depress dollar-denominated oil prices.
Investor caution was anticipated 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.
TENSIONS WITH IRAN
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.
PETROPLUS HEADS TO INSOLVENCY
U.S. heating oil futures, the benchmark distillate contract, and U.S. gasoline posted higher settlements in spite of recent inventory increases and the mild start to the winter season in most of the country.
"However, the product markets were well supported ahead of weekly stats and with some assistance from Petroplus shutdowns," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
Swiss-based oil refiner Petroplus (PPHN.S) said it was filing for insolvency. Petroplus has stopped three refineries in Switzerland, France and Belgium and plans to begin shutting one in England by week's end.
Also supportive to gasoline, Hess Corp (HES.N) shut the gasoline-making unit at its 70,000-bpd refinery in Port Reading, New Jersey, because of catalyst problems, trade sources said.
U.S. retail gasoline demand rose last week against the previous week, although it was down versus the year-ago period, MasterCard said.
The freight tonnage hauled by American trucks rose 6.8 percent in December from the previous month, the American Trucking Associations said in a separate report.
The 5.9 percent rise in 2011 was the biggest in 13 years, the ATA said.
U.S. OIL INVENTORIES
U.S. crude inventories rose 7.3 million barrels last week, the industry group American Petroleum Institute said in a report released late on Tuesday, much more than expected.
Gasoline stocks fell 573,000 barrels and total distillate stockpiles fell 2.5 million barrels, the API said.
U.S. crude stockpiles were expected to have increased by 800,000 barrels last week, according to a Reuters survey of analysts ahead of the API report. Gasoline stockpiles were expected to be up 1.9 million barrels, while total distillate stocks were seen unchanged.
The government's inventory report from the U.S. Energy Information Administration is due to follow the API report at 10:30 a.m. EST on Wednesday.
(Additional reporting by Gene Ramos in New York, Yeganeh Torbati in London and Manash Goswami in Singapore; Editing by Dale Hudson, Marguerita Choy, Bob Burgdorfer and David Gregorio)

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