NEW YORK Oil prices fell on Tuesday as concerns about slowing economic growth and curbed demand for petroleum countered hopes for more monetary stimulus from central banks in the United States and Europe.
Weak U.S. manufacturing data for August and a reported drop in construction spending in July weighed on oil and helped pressure equities on Wall Street.
"You need to see demand coming through," said Michael Hewson, a markets analyst at CMC Markets in London. "And the only way you are going to get demand growth is if oil prices fall. Any upside in oil is going to be limited."
The euro slid against the dollar as investors grew cautious on fears a European Central Bank plan to tackle the region's debt crisis may lack detail. A stronger dollar is usually bearish for dollar-denominated oil. <USD/>
U.S. Gulf Coast crude oil and refined fuel production lost to Hurricane Isaac limited oil futures losses as the industry restarts affected operations.
More than 710,000 barrels per day (bpd) of oil production remained offline, the U.S. government said, just over 50 percent of Gulf of Mexico offshore output. So far, the storm has shut in a total of 10.5 million barrels of oil production since August 25.
Brent October crude futures fell $1.60 to settle at $114.18 a barrel, having dropped as low as $113.93 after reaching $116.65.
U.S. October crude fell $1.17 to settle at $95.30 a barrel, below the 200-day moving average of $96.65, after trading from $94.97 to $97.37.
Brent crude posted a higher settlement on Monday, gaining $1.21, while U.S. markets were shut for the Labor Day holiday and crude futures trading on the CME Group's electronic platform was for Tuesday trade date. Brent and U.S. crude gained more than 9 percent in August.
Brent's premium to U.S. crude ended at $18.88 a barrel based on settlements, but reached $19.68 intraday.
Total Brent crude trading volume was 9 percent above the 30-day average, while U.S. turnover lagged the 30-day average by 4 percent.
After the expiration of September contracts on Friday, U.S. refined products futures slipped. October gasoline dipped 0.7 percent, while heating oil fell 1 percent.
As the Gulf Coast's refineries affected by Isaac restarted or resumed normal production, Phillips 66 said power was restored at its 247,000-barrel-per-day Belle Chase, Louisiana, Alliance refinery and efforts continued to bring it back on line.
France and Italy applied more pressure on the European Central Bank on Tuesday to agree steps to reduce crippling borrowing costs for southern euro zone states.
But the ECB is expected to outline rather than detail its strategy on Thursday.
Hopes for ECB bond buying had been raised on Monday after President Mario Draghi said that short-term sovereign bond purchases would not breach European Union rules.
U.S. Federal Reserve Chairman Ben Bernanke stopped short of signaling extra monetary easing was imminent during his much anticipated speech in Jackson Hole, Wyoming, last week, but kept the door open for action if needed.
The key U.S. nonfarm payrolls report for August due this Friday will have its tea leaves sifted for clues as to whether it will force the Fed to act to support a sputtering economy and address persistent unemployment.
High global oil prices are a cause of concern for the International Energy Agency, IEA Executive Director Maria van der Hoeven said, adding that crude markets were better supplied than those for refined fuels.
With the EU embargo on Iranian oil starting its third month, a U.S.-led sanctions pressure Tehran's customers to reduce purchases, Hurricane Isaac's trek through the Gulf of Mexico and into Louisiana has also clouded the supply picture.
G7 finance ministers have voiced concerns about the effect of high oil prices on the global economy but officials in Italy and Germany last week indicated opposition to releasing strategic petroleum reserves.
With Isaac shutting in production and limiting imports last week, U.S. crude oil, distillate and gasoline inventories are expected to have fallen last week, a Reuters survey of analysts on Monday showed.
U.S. oil inventory reports are delayed this week after Monday's U.S. Labor Day holiday, with industry group the American Petroleum Institute releasing its data at 4:30 p.m. EDT (2030 GMT) on Wednesday.
(Additional reporting by Claire Milhench in London and Ramya Venugopal and Wang Tao in Singapore; Editing by David Gregorio and Marguerita Choy)