(Reuters) - Oil was flat on Wednesday, as optimism prompted by positive economic data from China was eroded by recurrent worries about European debt problems. Front-month Brent crude was 6 cents higher at $111.59 a barrel by 1005 GMT, after touching an intraday peak of $112.16. U.S. oil gained 27 cents $100.98 a barrel. Oil was supported by weakness in the dollar .DXY, as oil priced in the U.S. currency becomes more affordable to holders of other units as it falls. International creditors are set to meet the Greek government to resume the talks that broke down last week over the interest rate Greece will offer on new bonds and a plan to enforce investor losses. Worries that Europe's debt problems would intensify and derail economic recovery took the shine off data from China the previous session, which had raised hopes China might revive monetary easing. "We've worked through the positive data from China from yesterday and people are starting to realize all of a sudden that it's not all sunny," said Andy Sommer, analyst at EGL in Dietikon, Switzerland. LOWERED FORECASTS Supporting this less upbeat assessment, the International Energy Agency lowered its oil demand growth forecast, citing mild weather in the northern hemisphere this winter and a rising likelihood of a sharp economic slow-down. Prices were supported by supply threats from the Middle East due to escalating tensions over Iran's nuclear program. The West is trying to isolate the Islamic Republic by imposing tougher sanctions and pressing top oil consumers from halting purchases of Iranain barrels. The European Union would ban the import of Iranian oil from July 1, giving member states nearly six months to wind up existing contracts, under a proposal by rotating EU presidency holder Denmark, EU diplomats said on Tuesday. However, indicating the situation would not soon spiral into military conflict, Defence Minister Ehud Barak said on Wednesday any decision about an Israeli attack on Iran was "very far off" and Russia said an attack on Iran would be a "catastrophe." Greece goes head to head with its creditors later in the day in a renewed attempt to break a deadlock in negotiations to slash the country's debt and stave off default. International private sector creditors represented by the Institute of International Finance (IIF) were set to meet the government in the afternoon. Another factor weighing on prices is expectations of a build up in crude stockpiles in the United States for the fourth straight week on strong imports. On average, domestic crude inventories were forecast up 2.8 million barrels, according to the poll of six analysts, who all predicted builds for the week to January 13. Data will be delayed by a day this week due to a holiday in the United States on Monday, with the American Petroleum Institute numbers due later in the day followed by the U.S. Energy Information Agency on Thursday.

Source