Oil prices ease as traders weigh Middle East tensions, demand

By Koustav Samanta
SINGAPORE, July 23 (Reuters) - Oil prices inched lower on
Tuesday as the International Energy Agency (IEA) said it would
act quickly if needed to keep the market supplied amid tensions
in the Middle East and traders eyed a weaker demand outlook.
Brent crude LCOc1 futures slipped 2 cents to $63.24 a
barrel by 0121 GMT. The international benchmark rose more than
1% in the previous session, following Iran's seizure of a
British tanker last week that stoked fears of supply disruptions
from the energy-rich Gulf.
West Texas Intermediate (WTI) crude CLc1 futures were down
6 cents, or 0.11% at $56.16 per barrel.
The International Energy Agency (IEA) said it was closely
monitoring developments in the Strait of Hormuz.
"The IEA is ready to act quickly and decisively in the event
of a disruption to ensure that global markets remain adequately
supplied," it said, adding that executive director Fatih Birol
has been in talks with IEA members, associate governments and
other nations. "Consumers can be reassured that the oil market is currently
well supplied, with oil production exceeding demand in the first
half of 2019, pushing up global stocks by 900,000 barrels per
day," the IEA said in a statement.
The potential for disruption in the Middle East has come
amid a more fundamental souring of market sentiment in recent
days, with hedge funds, producers and traders all taking a more
bearish tack in response to what they see as weakness in
worldwide demand. "Lower global demand estimates from OPEC, IEA and EIA have
hit crude prices in the last couple of weeks," said Alfonso
Esparza, senior market analyst at OANDA.
"Weather and geopolitical disruptions have been temporary
and only the OPEC+ deal has given traders clarity with the
group's commitment to reducing the oil glut at their expense."
The Organization of the Petroleum Exporting Countries (OPEC)
and some non-affiliated producers including Russia, known
collectively as OPEC+, have withheld supplies since the start of
the year to prop up prices.
Adding to pressure on prices, Libya's National Oil Corp
lifted a force majeure on loadings at the country's largest
Sharara oilfield, which had been closed since Friday.
Meanwhile, U.S. oil output from seven major shale formations
is expected to rise by about 49,000 barrels per day (bpd) in
August, to a record 8.55 million bpd, the U.S. Energy
Information Administration said last week.