Brent falls below $120 on China data, Euro zone worries

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SINGAPORE (Reuters) - Brent crude fell below $120 on Monday as growing worries about the global economy from Europe to China, the world's No. 2 oil consumer, reinforced concerns about slowing demand for petroleum.

But the slide in crude prices was stemmed by lingering concerns that western sanctions could further disrupt Iranian oil exports.

Front-month Brent crude slipped $1.28 to $119.93 a barrel by 3:31 a.m. Eastern Time, after settling at $121.21 a barrel on Friday. U.S. oil slipped 79 cents to $102.05 a barrel after settling at $102.83.

"The weaker-than-expected Chinese data appears to be the key driver of the market right now," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.

Data showed that China's economy grew at the slowest pace in nearly three years in the first quarter, raising fears that the downward drift will extend into the second quarter and dampen oil demand.

China's implied oil demand rose moderately in March over a year earlier, but stood at a five-month low on a daily basis, as refineries scaled back runs to the lowest level since October on maintenance and poor refining margins.

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China GDP, exports: link.reuters.com/zeq95s

Italy/Spain mkt overview: link.reuters.com/xyq57s

For a 24-hr technical outlook on oil: here

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A stronger dollar and a jump in the cost of insuring Spanish debt against default to a record high on Friday also renewed worries about the eurozone debt crisis.

A U.S.

"2 oil consumer, reinforced concerns about slowing demand for petroleum.But the slide in crude prices was stemmed by lingering concerns that western sanctions could further disrupt Iranian oil exports.Front-month Brent crude slipped $1.28 to $119.93 a barrel by 3:31 a.m"survey showed consumer sentiment had slipped in early April as higher gasoline prices hit household budgets.

The dollar index .DXY rose 0.21 percent on Monday. A stronger dollar makes the commodity more expensive for consumers using other currencies.

Oil prices were also under pressure after top oil exporter Saudi Arabia's Oil Minister Ali al-Naimi said on Friday that the country is determined to bring down high oil prices and is working with fellow OPEC members to accomplish that.

Naimi reiterated that there were no supply shortages in the global oil market and the kingdom stood ready to use its spare production capacity if necessary.

IRAN WORRIES

Concerns that further western sanctions could disrupt more Iranian oil exports offset worries on the global economy.

"The market is looking at the Middle East as well, especially on Iran's nuclear weapons program, as the issue needs to be resolved as soon as possible ahead of the U.S. elections," said Emori.

U.S. President Barack Obama said more sanctions would be imposed on Iran if there was no breakthrough in nuclear talks with global powers in the coming months.

Negotiators from Iran and six world powers met on Saturday for the first time in more than a year to discuss concerns about Tehran's nuclear program, which Iran says is for energy and others fear is meant to build an atomic bomb.

The group, which included the United States and the other four permanent U.N. Security Council members Britain, France, China and Russia, plus Germany, agreed with Iran to reconvene in Baghdad on May 23.

The potential for supply disruption and tighter sanctions has helped push crude prices higher in 2012.

The European Union's ban on importing Iranian oil, which is set to start in July, has already curbed Tehran's exports.

BRENT-WTI SPREAD

Brent's premium against U.S. crude benchmark West Texas Intermediate (WTI) narrowed by 49 cents to $17.40 a barrel, after settling at $17.89 on Friday.

The narrowing of the spread, if it continues, suggests that physical oil market fundamentals may be reflecting demand destruction, analysts from Deutsche Bank wrote in a note on Monday.

Discussions with Iran and Saudi Arabia's view that the current oil price is too high may lead to a short-term correction in the oil price, they said.

Any progress in talks with Iran and a reduction in the geopolitical risk premium in the second quarter could help reduce crude oil stockpiling which has been occurring across Asia, specifically in China and Thailand, they added.

(Editing by Sugita Katyal)