NEW YORK ( TheStreet) -- Oil prices were wavering Tuesday as concerns about Europe's ability to spur economic growth deepened.
West Texas Intermediate light sweet crude oil for January delivery was falling 36 cents to $100.63 a barrel and the January Brent crude contract was flat at $109.91. Prices were being held in check after Standard & Poor's painted a worrying picture of the eurozone heading into the European Union summit slated to kick off at the end of the week.
"S&P looks like it wants to collapse the western world's entire financial system," says WeatherBELL Analytics' energy analyst Alan Lammey.
Standard & Poor's said Tuesday that it has placed the long-term triple A credit rating of the European bailout fund, the European Financial Stability Facility, on negative outlook.
This follows the rating agency's move to place the long-term triple A ratings on the bailout fund's guarantor members, Austria, Finland, France, Germany, Luxembourg and the Netherlands on negative watch the evening before. On Monday after the markets closed, S&P placed the long-term sovereign ratings of 15 eurozone members on "creditwatch with negative implications," prompted by "our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole."
"With oil down, it's clear there is concern about the EU and demand going forward," says Kingsview Financial analyst Matt Zeman.
"Many traders have begun to wonder whether a more meaningful correction or period of consolidation may be on the horizon and whether Europe could stall global growth," says optionsXpress analyst Mike Zarembski.
Oil has risen
more than $25 a barrel since bottoming out in October.
WTI prices have managed to settle above $100 every day since last Wednesday.
optionsXpress recommends "going long" on crude oil contracts on a significant close above $102.59 a barrel and taking a short position in the market on a close below $95.
Oil prices shot up earlier after European Union Energy Commissioner Guenther Oettinger said there was consensus to ban Iranian oil imports.
WeatherBell's Lammey says the European Union members have to "walk a very cautious line with Iran."
"Granted Iran doesn't produce an incredible amount of world oil supply, but they can cause huge problems with regard to oil tankers in the Strait of Hormuz -- where 40% of world's oil is transported."
About half of Iran's budget revenues come from oil, revenues which many assume are used to build up the country's nuclear program.
"I think that if this does happen it will be very bullish," said PFGBest senior energy analyst Phil Flynn. "It looks like they may wait till after winter," he commented.
Other analysts noted that threats of a ban may remain just that.
"No one wants to see oil prices go through the roof as it would have grave economic consequences around the world at a time when a lot of large economies are struggling," says Lammey.
optionsXpress analyst Zarembski doubts that an EU ban would have a big financial impact on Iran any way, as long as energy-hungry Asian consumers continued buying.
Energy stocks were mostly losing ground.
(HES - Get Report)
was falling 1.4% to $59.94;
(APC - Get Report)
was down 0.6% to $81.28;
(APA - Get Report)
was lower by 0.6% to $96.35;
(TPLM - Get Report)
was falling 1.3% to $5.87;
was behind by 1.3% to $196.30;
(BP - Get Report)
was flat at $43.55; and
(CHK - Get Report)
was up 0.3% to $25.22.
-- Written by Andrea Tse in New York.
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