Oil Prices Slip on Poor Eurozone Data

World oil prices dipped on Wednesday as weak economic data and fears over Greece sparked demand concerns, overshadow eding geopolitical concerns surrounding key crude producer Iran, dealers said.

Brent North Sea crude for delivery in April fell 11 cents to $121.55 a barrel in London midday deals.

New York's main contract, light sweet crude for April, lost 36 cents to $105.89 a barrel.

Prices hit nine-month highs earlier this week in the run up to and after the Greek bailout announcement.

Eurozone private sector activity shrank unexpectedly in February, a key survey showed on Wednesday, sparking fresh fears that the region is heading for recession.

The composite purchasing managers' index (PMI) for services and industry compiled by the research firm Markit sank to 49.7 points from 50.4 points in January.

Any score in the survey of 4,500 manufacturing and services firms above 50 points indicates growth, while a score below indicates contraction.

"Today, crude oil prices look set for some consolidation as Iranian supply side tensions are giving way slightly to Eurozone slowdown fears after this morning's PMI data, implicitly weighing on European demand expectations," said Sucden brokers analyst Jack Pollard.

"Further, weakness in European equities is reflective of broader risk aversion."

Sentiment took another hit from downbeat manufacturing data in China, which is the world's leading consumer of energy.

China's manufacturing activity continued to contract in February as export orders weakened, HSBCsaid Wednesday, in a further sign that the Eurozone crisis and U.S. weakness are hurting demand.

HSBC's preliminary purchasing managers index rose to 49.7, the highest level in four months, from a final reading of 48.8 in January, the British banking giant said in a statement.

But while the figure marked an improvement it still remained below 50, indicating the sector is contracting.

The oil market also pulled lower amid ongoing worries that Greece may face difficulties delivering on tough economic reforms that are needed for the new bailout.

The international ratings agency Fitch said Wednesday that it had cut the long-term rating on Greece's sovereign debt by two notches, from "CCC" to "C", adding that a Greek debt default was "highly likely in the near term."

On Tuesday, the European Union and Greece agreed a 237-billion-euro ($310 billion) rescue package that saves Athens from a messy debt default.

Meanwhile on Wednesday, crude producer Iran denied U.N. inspectors probing its nuclear weapons activities access to a key military site.

The visit by the team from the International Atomic Energy Agency (IAEA) was aimed at clarifying issues surrounding possible military dimensions to Iran's nuclear program.

Western countries have charged that Iran is attempting to produce an atomic weapon, while Tehran has insisted that its program is solely for producing energy and treating cancer patients.

The U.S. Department of Energy will publish its weekly snapshot of American oil inventories on Thursday, one day later than normal owing to a public holiday on Monday.