Crude Stays Balanced Between Euro Zone, Iran

Oil futures finished with a slight decline Monday, as the market remains balanced between fears euro-zone debt woes could hurt the global economy and worries tensions between Iran and the West could erupt and lead to supply shortages.

Crude prices drifted in this equilibrium for much of the day with little other direction, in the absence of new economic data or significant moves in the stock market.

Light, sweet crude for February delivery settled at $101.31 a barrel on the New York Mercantile Exchange, down 25 cents or 0.3%. Brent crude on the ICE Futures Europe exchange ended the day down 61 cents at $112.45 a barrel.

In Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy met to discuss their latest initiative to contain Europe's sovereign debt crisis, which relies on containing budget deficits in member countries. The sovereign debt crisis has been pushed to the background recently amid the Iran tensions, but markets have begun to focus on it again as worries emerge that the bailout of Greece is unraveling.

Meanwhile, Iran continued to provoke ire. The country announced it was enriching uranium at a second facility, and an Iranian court sentenced an American citizen to death for allegedly spying for the Central Intelligence Agency.

U.S. officials condemned both developments. Iran and Western countries have been increasingly at odds over the last two months, after international weapons inspectors accused Iran of pursuing nuclear weapons technology.

Since then, the U.S. and other Western nations have sought sanctions against Iran, and Iran has responded with threats to close the Strait of Hormuz, a key passageway for one-third of the world's ocean-borne oil.

"It really has been kind of a yin-yang type of situation here," said Phil Flynn, analyst at brokerage PFG Best in Chicago. "We'd probably see more of a downside move if it weren't for the Iran situation, because the market would be more focused on Europe and nervous about Europe. The bullish and bearish forces are keeping us flat."

In a research note, Ritterbusch and Associates noted that crude held up above the psychologically important $100 a barrel level despite some intra-day volatility, and said the market could remain in a "holding pattern" until weekly oil inventory data comes out Wednesday.

"WTI crude feels like a market wanting to head lower but is currently being precluded in this regard by a steady tone to the equities, particularly within the U.S., where favorable economic guidance continues to be seen out of most releases," the firm said.

Traders and analysts were also watching developments in Nigeria, Africa's largest oil exporter, where a nationwide strike was under way against the end of fuel subsidies. Still, sources told Dow Jones the strike has not yet had an impact on oil trade.

Front-month February reformulated gasoline blendstock, or RBOB, settled up 0.74 cent at $2.7590 a gallon. February heating oil ended up 0.28 cent at $3.0730 a gallon.