* U.S. service sector gauge up in May, supportive to oil
* All of the euro zone's major economies in decline -PMI
* Coming up: EIA oil data 10:30 a.m. EDT Wednesday (Adds API data paragraphs 17-20)
By Robert Gibbons
NEW YORK, June 5 (Reuters) - Brent crude prices dipped a penny in choppy trade o n T uesday, while U.S. crude rose for a second day as supportive U.S. data countered pressure from another batch of weak euro zone figures that reinforced concerns about future demand for petroleum.
Price consolidation should be expected, analysts and traders said, after Brent crude dropped below $100 a barrel on Friday for the first time since October. It has retreated from a 2012 peak above $128 a barrel in March.
They also noted that price drops during the session did not threaten multimonth lows posted on Monday.
"It has come off a long way, maybe now it's time to consolidate," said Tony Machacek, oil futures broker at Jefferies Bache.
Crude futures and equities prices received a lift from an industry report showing growth in the U.S. services sector picked up slightly in May.
Brent July crude dipped 1 cent to settle at $98.84 a barrel. The session low of $97.68 was nowhere near Monday's 16-month low of $95.63.
U.S. July crude edged up 31 cents to settle at $84.29, falling only to $83.31 intraday, well above Monday's $81.21 low.
Total Brent crude trading volume lagged U.S. crude turnover, with Britain's celebration of Queen Elizabeth's 60 years on the throne thinning trade. Both Brent and U.S. dealings trailed their 30-day averages.
Oil prices near $100 a barrel remain a threat to a slowing global economy, the International Energy Agency's executive director said on Tuesday.
The dollar's strength helped limit oil price gains as the euro fell, after hitting a one-week high against the dollar, when Spain said high borrowing costs mean the country is effectively shut out of the bond market and the European Union should help recapitalize Spain's banks.
The lack of an official joint statement after a teleconference held by Group of Seven finance ministers to discuss the euro zone crisis dashed expectations the call would result in dramatic initiatives.
Investors awaited results from Wednesday's European Central Bank (ECB) policy meeting and the Bank of England's on Thursday.
Also on tap is Federal Reserve Chairman Ben Bernanke's Thursday testimony before a congressional panel as investors sift central bank tea leaves for any clues about plans for bolstering a faltering economic recovery.
"G7 guidance ... failed to offer any major surprises and the market appears to be in holding pattern awaiting tomorrow's ECB indications," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.
FALTERING EURO ZONE
Fanning concerns about global oil demand growth, euro zone retail sales fell more than expected in April, sliding by the biggest margin so far this year.
Purchasing managers indexes from Markit showed all the bloc's major economies are in various states of decline and the vast private economy shrank in May at the fastest pace in nearly three years.
U.S. OIL INVENTORIES
U.S. crude oil stocks fell 1.8 million barrels last week, according to a report from industry group American Petroleum Institute.
While total inventories fell, stocks at the Cushing, Oklahoma, hub rose 929,000 barrels, the API said, even with the Seaway pipeline reversed to bring crude to the Gulf Coast.
Gasoline stocks rose 1.4 million barrels and distillate stockpiles rose 1.8 million barrels, the API said.
Ahead of the API data, U.S. crude stocks were expected to have fallen 500,000 barrels, a Reuters survey of analysts showed. Gasoline stocks were seen up 700,000 barrels and distillate stocks up 300,000 barrels.
A separate report from MasterCard showed U.S. retail gasoline demand fell last week versus the previous week and against the year-ago period.
The Energy Information Administration's (EIA) inventory report follows on Wednesday at 10:30 a.m. EDT (1430 GMT).
The EIA has reported 10 consecutive stock builds that have left U.S. commercial inventories at their highest since 1990.
IRAN ASSERTS NUCLEAR RIGHTS
While the euro zone's debt crisis, sputtering U.S. jobs growth and China's slowing factory sector have hogged the spotlight and pressured oil and other commodities, the dispute over Iran's nuclear program remains unresolved.
An embargo on Iranian crude oil by the European Union remains set for July and on Tuesday a source at Turkey's only refiner said the country has steeply cut imports from Iran in May and June as U.S.-led sanctions tighten.
The U.N.'s International Atomic Energy Agency and Iran hold a second round of talks in Vienna on Friday.
Iran and the six powers -- the United States, France, Russia, China, Germany and Britain -- will meet for a third time this year in Moscow on June 18-19 to discuss the nuclear issue after making little progress at their most recent meeting. (Additional reporting by Gene Ramos in New York, Jessica Donati in London, Randy Fabi in Singapore and Florence Tan and Simon Webb in Kuala Lumpur; editing by Sofina Mirza-Reid, Marguerita Choy and Jim Marshall)