LONDON: Oil hovered around $119 a barrel on Tuesday as economic expansion in China helped counter a sluggish US economy and bubbling euro zone debt crisis that may depress demand for fuel.
China's factory sector grew at a slightly higher rate in April from the previous month, a sign its economy may have bottomed out in the first quarter.
The world's no. 2 oil consumer is expected to account for nearly half of global incremental oil demand this year.
Brent crude slipped 47 cents to $119 a barrel by 1112 GMT. US crude eased 30 cents to $104.57.
"China is still in an expansionary phase and we saw a slight tick-up on the month," said Ben Le Brun, a Sydney-based market analyst at OptionXpress.
But debt woes in Europe continued to cast a pall over the region's economies, with Spain, the fourth-largest economy in the euro zone, sinking into recession in the first quarter.
In the United States, where the economy slowed going into the second quarter, spending increased only modestly last month and a gauge of Midwest business activity fell sharply.
Higher OPEC output and expectations for a sixth weekly rise in US crude inventories could also weigh on prices.
"OPEC pushing production to the limit in the weakest demand quarter is clearly a recipe for lower prices," said David Hufton of oil brokers PVM in a report.
OPEC's April output was at its highest since 2008 as extra crude from Iraq and Saudi Arabia helped make up for tighter sanctions on Iran, whose own oil output sank to the lowest in two decades, a Reuters survey found.
Iraq's crude exports rose to 2.508 million barrels per day (bpd) in April from 2.317 million bpd in March as new offshore export terminals helped increase sales, the head of its State Oil Marketing Organisation said on Tuesday.
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