(Reuters) - Brent crude futures steadied near $112 a barrel on Tuesday as investors weighed a weaker outlook for demand due to a sluggish global economy against potential supply disruptions.
The global crude benchmark opened the fourth quarter lower on Monday in the face of poor manufacturing data in Europe and China, with analysts expecting further price weakness.
"I see continued downward pressure for oil. Supply will continue to chase demand, given the weak economic fundamentals overall," said Victor Shum, managing director for downstream energy consulting at IHS Purvin & Gertz.
"Geopolitics is still the wild card and could provide support or even spikes for prices in coming months," said Shum, citing sustained tension between major oil producer Iran and the West over Tehran's disputed nuclear program.
Supply disruption worries, along with efforts by major central banks to spur economic activity via increased liquidity, pushed up Brent prices by 15 percent in the third quarter, their best three-month showing in 1-1/2 years.
Brent crude for November delivery was up 4 cents at $112.23 a barrel by 2.22 a.m. EDT. U.S. crude slipped 4 cents to $92.44.
Data on Monday showing that U.S. factory activity expanded for the first time since May helped U.S. oil futures close firmer.
While Federal Reserve Chairman Ben Bernanke was confident the U.S. economy was not at risk of slipping into a recession, he said growth in the world's largest oil consumer was too slow.
Although manufacturing activity in the U.S. increased in September, it remained well off levels seen earlier this year.
"The pick-up is from a very low base, the key focus now in the United States is getting unemployment down, and to make inroads, you'll need at least 3 percent economic growth," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
The U.S. economy grew at a rate of 1.3 percent in the second quarter and most analysts expect growth to remain sluggish.
AT THE CORE
Worries about the three-year euro zone debt crisis also remain at the core of investor concerns.
Debt-hit Spain is ready to request a euro zone bailout although it could face resistance from Germany, European officials said, suggesting a solution to the nagging debt crisis remains elusive.
"We have seen progress, but it's been long and drawn-out. Now we are going to see more posturing between Spain, who will want to give up as little economic sovereignty as possible, while Germany and the other members of the zone will be seeking to gain more control," Spooner said.
"The longer-term solution is to repair the balance sheet and raise employment levels, but they will need to look beyond austerity because it just doesn't seem to be working at the moment."
The debt crisis that began in Greece in 2010 and has spread across the euro zone to engulf Ireland, Portugal, Cyprus and the much bigger economy of Spain has devastated business confidence and sapped the ability of companies to create jobs.
Supporting Brent prices are concerns over the potential for delays in shipments of North Sea Forties crude, one of the most important grades of the Brent contract.
On Monday a seventh cargo of the crude was delayed for October due to lower output levels. September and October Forties delays are the most significant since May's loading program, when 11 out of 19 planned Forties cargos were deferred.
In the U.S, a Reuters poll of analysts forecast a build of 1.5 million barrels in crude inventories last week on expectations of a rebound in crude imports. Gasoline and distillate stockpiles are expected to fall slightly.
(Editing by Clarence Fernandez and Joseph Radford)
Copyright 2012 Thomson Reuters. All rights reserved.