UPDATE 10-Oil rises on supply cuts, Mideast tensions; trade worries cap gains

* British capture of Iranian tanker won't go 'unanswered'-
officer
* U.S. EIA cuts 2019 world oil demand growth forecast
* U.S. crude inventories expected to fall for 4th week
* Coming up: API U.S. oil inventory data at 4:30 p.m.
EDT/2030 GMT

(Updates prices, adds commentary)
By Collin Eaton
HOUSTON, July 9 (Reuters) - Oil futures rose on Tuesday as
Middle East tensions and OPEC supply cuts kept global benchmark
Brent crude above $64 a barrel, while gains were limited by the
U.S.-China trade dispute that has dragged on the global economy
and crimped oil demand.
OPEC and allied producers led by Russia agreed last week to
extend their supply-cutting deal until March 2020. Brent has
risen almost 20% in 2019, supported by the pact and tensions in
the Middle East, especially the row over Iran's nuclear
programme.
Brent LCOc1 settled up 5 cents to $64.16. U.S. West Texas
Intermediate crude CLc1 settled up 17 cents to $57.83.
Supporting prices was an Iranian military official's
comments that Britain's seizure last week of an Iranian oil
tanker off the coast of Gibraltar will not be "unanswered,"
according to the semi-official Tasnim news agency. "Iranian military talking about payback for the Gibraltar
situation has put a little bid in the market here," said Robert
Yawger, director of energy futures at Mizuho in New York.
Rising tensions have brought Iran and the United States
close to conflict. The European Union on Tuesday urged Iran to
reverse its scaled up uranium enrichment that breaches a nuclear
deal it agreed in 2015 with world powers. Washington withdrew
from the accord last year and re-imposed sanctions. "The market is still caught between concerns of slowing
growth and high geopolitical risk with Iran," said Phil Flynn,
an analyst at Price Futures Group in Chicago.
Price gains were capped by the U.S.-China trade war that has
dampened prospects for global economic growth.
The world's two largest oil consumers are set to relaunch
trade talks this week, although there are few signs their
differences have narrowed. In its monthly forecast on Tuesday, the U.S. Energy
Information Administration (EIA) cut its 2019 world oil demand
growth forecast by 150,000 barrels per day to 1.07 million bpd.
It attributed the revision to lower-than-expected global
fuel consumption and weakening economic growth, citing
"increasing uncertainty" and "increasingly weak global economic
signals."
"It's because of trade wars and tariffs," said Andy Lipow,
president of Lipow Oil Associates in Houston. "There has been no
progress in the U.S.-China trade dispute. The EIA sees these
things and revises downward their forecast accordingly."
In recent months, the economic slowdown has influenced
prices more than supply cuts following U.S. sanctions on
Venezuela and Iran, OPEC's extension of its oil pact to the
first quarter of 2020 and larger-than-expected output reductions
by Saudi Arabia, the EIA said.
It was the sixth consecutive month that the EIA revised its
2019 demand forecast.
Russian oil output fell close to a three-year low in early
July, industry sources told Reuters. This follows
discovery of contaminated Urals crude that affected the Druzhba
pipeline to Europe.
"The Russian story definitely supports prices today. ...
lower Russian output together with elevated compliance from OPEC
nations should rebalance the oil market faster," said Giovanni
Staunovo, oil analyst for UBS.
The markets also gained support from forecasts that U.S.
crude stockpiles fell 3.1 million barrels last week, which would
be their fourth straight weekly decline. The first weekly supply
report is due at 4:30 p.m. EDT (2030 GMT) from the American
Petroleum Institute, an industry group, followed by the EIA on
Wednesday morning. EIA/S
However, the EIA raised its outlook for U.S. crude oil
production, projecting an all-time high of 12.36 million bpd in
2019, versus its forecast last month of 12.32 million
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TECHNICALS-U.S. oil may retest support at $56.50 oil may fall to $63.15 Oil drilling and storage png https://tmsnrt.rs/2Ino7XU
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