Oil prices fell on Friday May 18, 2012 in tug-of-war trading, posting a 2012 low and a third straight weekly loss as debt problems in Greece and Spain kept concerns about the euro zone economy in focus.

Crude futures felt pressure from news that European officials were working on contingency plans in case Greece exits the euro zone and from a ratings downgrade of 16 Spanish banks by Moody's Investors Service.

Helping push oil lower early was data showing Chinese home prices in April fell for a second month in a row from year-ago levels.

"The problems in Europe, highlighted by the political instability in Greece, remain as the primary factor for today's slide in oil prices," said Kyle Cooper, managing partner at IAF Advisors in Houston.

"There is also a factual realization that the Chinese economy is slowing and that's bad for oil demand," Cooper added.

Position squaring after this week's expiration of Brent's June contract and U.S. June crude options and caution ahead of the weekend's Group of Eight meeting limited oil losses and added to the choppy trading, traders and analysts said.

Also in focus is this weekend's planned start of crude oil flows on the reversed Seaway pipeline.

The reversal is intended to ease a glut of crude in the U.S. Midwest by bringing it via Seaway to the refinery-rich Gulf Coast and reducing Brent's premium to its U.S. counterpart.

Brent July crude eased 35 cents to settle at $107.14 a barrel, having fallen to a 2012 low of $106.40, its lowest intraday price since December 21. For the week, Brent slipped 3.7 percent and the 10.59 percent loss in three weeks is the biggest three-week percentage drop since the week to May 20, 2011.

U.S. June crude fell a sixth straight session, dropping $1.08 to settle at $91.48, after tumbling to $91.08, the lowest intraday price since November 3.

U.S. crude fell 4.84 percent for the week. Three weekly losses totaled 12.82 percent, the biggest three-week percentage drop since the week to August 14, 2011.