Oil prices hovered above $86 a barrel Tuesday as economic growth in China slowed slightly and German officials dampened hopes that a broad plan to contain Europe's debt crisis will be completed this week.
By early afternoon in Europe, benchmark crude for November delivery was down 15 cents at $86.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents to settle at $86.38 in New York on Monday.
In London, Brent crude for December delivery was down 76 cents at $109.40 a barrel on the ICE Futures exchange.
Crude has risen from $75 two weeks ago as investors bet European leaders will soon announce a plan that will stem the contagion from a possible Greek sovereign debt default. However, German finance chief Wolfgang Schaeuble on Monday dampened expectations that they'd hammer out a comprehensive solution at an upcoming summit in Brussels this weekend.
Schaeuble's comments "pushed up risk aversion noticeably and pushed down the price of oil," said analysts at Commerzbank in Frankfurt.
The Dow Jones industrial average fell 2.1 percent Monday on the news and Asian and European stock markets were lower Tuesday.
"We feel that the continued huge question mark behind efforts to address eurozone sovereign debt issues will ultimately push both equities and oil values back down to around the early October lows," energy consultant Ritterbusch and Associates said in a report. "The slightest headline out of a leading member such as Germany can prompt a sharp price decline."
Traders were also weighing the latest economic growth figures from China. Gross domestic product expanded 9.1 percent in the third quarter, the slowest pace in two years.
"This has strengthened concerns ... that China's demand for oil could weaken further," Commerzbank said, also citing other recent statistics indicating that China's oil demand growth has dropped by two-thirds since the beginning of the year.
Investors are meanwhile waiting for new figures on U.S. stockpiles of crude and refined products.
Data for the week ending Oct. 14 is expected to show a build of 1.75 million barrels in crude oil stocks and a draw of 1.25 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
On the bullish side, "oil prices continue to draw support from the tightness in the physical market, especially in the Atlantic Basin," said a report from JBC Energy in Vienna. "Production in the North Sea and West Africa were and continue to be subject to interruptions, while Libyan barrels only slowly return to the market."
In other Nymex trading, heating oil lost 0.74 cent to $3.0062 per gallon and gasoline futures fell 1.26 cents to $2.7303 per gallon. Natural gas retreated 3.7 cents to $3.651 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
Copyright 2011 The Associated Press.