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UPDATE 6-Oil pulls back on concerns about Europe's slow growth

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Published: Tuesday, 19 Feb 2013 | 12:49 AM ET
By: Robert Gibbons

* Sputtering French growth reinforces worry about euro zone

* Expanded Seaway crude pipeline flows remain constrained

* Coming up: API oil data 4:30 p.m. EST Wednesday

(Recasts with updated prices, market activity; changes byline and dateline, pvs LONDON)

NEW YORK, Feb 19 (Reuters) - Brent crude prices fell on Tuesday and U.S. refined products futures pulled back, pressured by concerns about Europe's economic growth and expectations that rising prices will curb demand in the United States.

U.S. crude futures eased but in seesaw trading as the front-month March contract approached its contract expiration on Wednesday.

"The concerns about Europe's economy have weighed on crude oil," said Phil Flynn, an analyst at Price Futures Group in Chicago.

After finding support below $110 a barrel in mid-January, Brent rallied and reached a nine-month peak above $119 on Feb. 11, spurred by signs of revived economic growth in the United States and China and higher demand forecasts from the U.S. Energy Information Administration and OPEC.

Expectations that economic growth in France will miss the government's 2013 target and caution about Italy's election added to investor uncertainty about the outlook for the euro zone and weighed on crude prices on Tuesday.

Brent April crude fell 57 cents to $116.81 a barrel by 12:17 p.m. EST (1717 GMT), having slipped to $116.55 during the session.

U.S. March crude was down only 19 cents at $95.67 a barrel, measured against Friday's close as there was no settlement for U.S. oil futures on Monday because of a holiday.

U.S. April crude was down 20 cents at $96.21 a barrel.

U.S. March heating oil fell more than 1 percent, with March gasoline futures also slipping on Tuesday.

"The (Brent) price currently appears to have reached a ceiling of $118 per barrel, which could prompt short-term-oriented market players to abandon their long positions," Carsten Fritsch, a senior oil analyst at Commerzbank in Frankfurt, said.

Brent speculators reduced their net long positions from a record high in the week to Feb. 12.

SEAWAY CRUDE OIL PIPELINE

Crude oil throughput on the expanded Seaway Pipeline will continue well below nominal capacity due to the mix of heavy and light crude being transported, according to a company filing with federal regulators.

The flow on the pipeline, owned by Enterprise Product Partners and Enbridge Energy Partners LP, was reversed last year to move crude oil from the U.S. Midwest - where production has soared - south to refineries on the Gulf Coast.

Seaway, recently expanded to a capacity of 400,000 barrels per day, should average 295,000 bpd between February and the end of May and was not expected to see flows above 335,000 bpd in "the foreseeable future," according to the filing made to the U.S. Federal Energy Regulatory Commission.

After Brent's premium to U.S. futures <CL-LCO1=R> weakened on expectations more crude was going to be moved from the Midwest, the spread widened in late January after constraints on the Seaway pipeline curbed shippers' ability to reduce the elevated crude stockpiles at the Cushing, Oklahoma, hub.

Brent's premium to U.S. crude reached $23.45 on Feb. 8, its highest level since Nov. 23, but has pulled back since then and was below $21 a barrel on Tuesday.

GEOPOLITICAL RISK WILD CARD

"With a significant geopolitical risk premium currently priced in, we feel that some downside is warranted, unless there is a significant escalation in Middle East North/Africa tensions," Standard Bank commodities analyst Marc Ground said.

Andrey Kryuchenkov of VTB Capital identified a risk premium of around $10 a barrel in the Brent price linked to Middle Eastern tensions over Iran's disputed nuclear program.

Investors are keeping a close eye on nuclear talks between major powers and Iran set for next week. Sanctions on OPEC-member Iran have reduced its oil exports and could have fallen below 1 million bpd in January, according to estimates from the International Energy Agency (IEA).

"The political risk premium is overblown, so Brent won't get any higher unless something happens in the Middle East. People will probably take profits this week," Kryuchenkov said.

(Additional reporting by Christopher Johnson and Emma Farge in London and Florence Tan in Singapore; Editing by Marguerita Choy)

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NEW YORK, Feb 19- Brent crude prices fell on Tuesday and U.S. refined products futures pulled back, pressured by concerns about Europe's economic growth and expectations that rising prices will curb demand in the United States. "The concerns about Europe's economy have weighed on crude oil," said Phil Flynn, an analyst at Price Futures Group in Chicago.

   
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