Oil Prices Dip but Stay Close to 9-Month High

Oil dipped slightly to below $119 a barrel on Monday, but stayed close to a nine-month high, as investor concern about the euro zone economy offset stronger-than-expected demand growth in China.

European stocks eased and the dollar index rose. Brent crude had hit the nine-month high on Friday after data showed Chinese crude imports rose to the third-highest rate on record.

Oil price gains "are happening against a backdrop of an overall moderate improvement in world economic growth outlook and demand," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Brent crude slipped by 24 cents to $118.66 a barrel by 0933 GMT, after reaching $119.17 on Friday, the highest since May. U.S. crude fell 9 cents to $95.63.

While Chinese growth is supporting oil prices, developments in the euro zone continue to weigh on equities and the euro. A corruption scandal is threatening political instability in Spain and Italy's election race is becoming tighter.

Later this week, traders will be closely watching U.S. retail sales and industrial production figures due later this week for further indications of economic growth in the world's largest economy.

With many Asian markets shut for Chinese New Year, trade is likely to be light this week.

Oil could get some support from stormy weather in the heavily populated U.S. Northeast, where a blizzard dumped up to 40 inches (1 metre) of snow with hurricane force winds, leaving hundreds of thousands of people without power.

Washington and Tehran may have more time to negotiate around Iran's disputed nuclear programme after news that Iran appears to have resumed converting small amounts of its higher-grade enriched uranium into reactor fuel.

Slowing a growth in stockpiles of material that could be used to make weapons is one of the few ways in which the nuclear dispute could avoid hitting a crisis by the summer.

The dispute has led to concern about Middle East supply for years. Iran has threatened to block shipments through the Strait of Hormuz in the event it is attacked. Some 40 percent of the world's globally traded oil passes through the strait. (Reporting by Rebekah Kebede in Perth and Alex Lawler in London; Editing by Alison Birrane)