(Reuters) - Brent crude futures slipped below $111 per barrel on Wednesday, hurt by persistent concerns over global growth and oil demand, while Europe's festering debt crisis added to uncertainty.
Simmering tensions in the Middle East kept losses in check, however, with investors increasingly convinced that a dispute over Iran's nuclear program will drag on.
"It's hard to get bullish when the numbers are so bad, especially in China and the euro zone," said Tony Nunan, an oil risk manager at Mitsubishi Corp, referring to weak manufacturing data released this week.
"But prices are not going to fall that far, as the situation between Iran and Israel will keep the heat under the market until the end of the year."
Brent November crude futures had fallen 66 cents to $110.91 a barrel by 2.34 a.m. EDT. They ended Tuesday below two critical technical levels -- the 50-day moving average at $112.06 and the 200-day moving average at $112.09.
U.S. November crude shed 50 cents to $91.39 a barrel and could drop below $89 after failing to break key resistance at $93.33.
But a supportive factor for U.S. prices was data from the American Petroleum Institute showing that inventories rose less than expected last week, adding 462,000 barrels, against expectations for a build of 1.5 million barrels.
The U.S. Energy Information Administration (EIA) releases its weekly estimates on Wednesday at 10.30 a.m. EDT.
Concerns about global growth intensified this week, after a raft of manufacturing data showed companies have yet to benefit from stimulus measures by central banks and governments.
While manufacturing in the United States grew unexpectedly in September, the euro zone's factories suffered their worst quarter in nearly three years and China appeared to have lost steam.
Adding to investor worries are next month's elections in the U.S. and the likelihood of a sharp cut in the country's budget deficit after the polls, which could hurt a nascent recovery in the world's biggest oil consumer.
"(Investors) have to contemplate whether such policy developments will soon result in genuine broader macro healing," Bank of America-Merrill Lynch analysts said in a report.
"We are less sanguine, especially as focus turns to a potentially negative interaction between the oncoming U.S. fiscal cliff and the peak of the election season."
The twists and turns in the European debt crisis are also keeping investors on edge.
Spanish Prime Minister Mariano Rajoy said on Tuesday a request for European aid was not imminent, while Greece held a new round of talks with foreign lenders to bridge differences over disputed austerity cuts.
The impact of the crisis is also being felt in the oil business, weakening demand, analysts said.
"The independent European refiners have faced a sharp increase in their financing costs, and a general lack of credit availability, as European banks have cut back on their lending, particularly to companies in the commodity space," Goldman Sachs said in a report.
"Consequently, European refiners have kept their inventories lean and their runs low as they now require higher refining margins to cover higher funding costs."
UNDER THE SPOTLIGHT
Supply concerns remain heightened as an ongoing dispute over Iran's nuclear program came back under the spotlight after last week's speeches by the heads of states of Iran, Israel and the United States at the United Nations.
Sanctions by the U.S. and European Union on Iranian oil shipments have left the Middle Eastern nation's economy reeling, plunging the currency to a record low on Tuesday.
Investors are also closely monitoring elections in OPEC member Venezuela, where incumbent president, Hugo Chavez, is facing a strong challenge from opposition candidate Henrique Capriles.
Venezuela's crude oil sales remain critical for the heavily indebted nation's finances.
(Additional reporting by Wang Tao; Editing by Clarence Fernandez and Joseph Radford)
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