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Oil pauses from decline
PERTH (Reuters) - Oil held steady and hovered at a seven-week low of about $123 a barrel on Monday, pausing from a decline that has knocked more than $23 off crude in two weeks, despite escalating tensions in Iran and Nigeria.
Analysts said geopolitical tensions were being overshadowed by worries of slowing oil demand, as recent reports showed fuel consumption in the United States and other industrialized nations has begun to slide, dragging oil down from record peaks over $147 a barrel on July 11.
U.S. light crude for September delivery rose 9 cents to $123.35 a barrel by 2335 GMT. The contract fell $2.23 on Friday to settle at $123.26, after falling to as low as $122.50, the lowest since June 5.
London Brent crude fell 12 cents to $124.40.
"The market is taking more notice of supply and demand issues, so that's swaying sentiment at the moment," said Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) bank in Sydney.
Expectations that OPEC-Kingpin Saudi Arabia would be raising crude supplies by an additional 300,000 barrels per day (bpd) for July, on top of the extra 200,000 bpd brought on last month, were also weighing on sentiment, Pervan said.
Saudi Arabia pledged to expand its output in June, following pleas by consumer nations for extra supplies to curb surging oil prices.
Still, geopolitical concerns in the Middle East and rebel threats against oil installations in OPEC member Nigeria were expected to keep a floor under oil prices, analysts said.
Iran has more than 5,000 active centrifuges for enriching uranium, its president was quoted as saying on Saturday, suggesting a rapid expansion of nuclear work the West suspects is aimed at making bombs.
President Mahmoud Ahmadinejad's announcement was likely to annoy major powers which have offered Iran a package of economic and other incentives to persuade Tehran to suspend its enrichment activities.
In Nigeria, gunmen released eight foreign oil workers seized from a vessel off the Niger Delta on Saturday but eight other people abducted in separate incidents were still being held, security officials said.
Crude speculators on the New York Mercantile Exchange shifted to a net short position in the week to July 22, according to data from the Commodity Futures Trading Commission released on Friday. It was the first time speculators have been short crude oil positions since February 13, 2007.
Rising demand in emerging economies like China launched oil on a six-year rally that sent prices up sevenfold at their peak. The sharp drop has some analysts forecasting oil prices may have peaked, with Lehman Brothers predicting $90 a barrel by the end of the first quarter of 2009.
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
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