Oil steadies near $124

By Janet McGurty and Alex Lawler

LONDON (Reuters) - Oil steadied around $124 a barrel on Tuesday, weighed by a forecast for slower growth in world demand this year from the International Energy Agency.

A decline in China's oil imports in April, the first year-on-year drop in 18 months, also raised questions over demand. China is the world's second-largest oil consumer after the United States.

U.S. crude was down 6 cents to $124.17 a barrel by 3:20 p.m., after falling as low as $123.10. On Monday, it hit a record of $126.40. London Brent crude was off 42 cents to $122.49.

"Although I still think we have more upside potential, perhaps all the way up to $130, I think the market is getting ready for a correction," said Nauman Barakat of Macquarie Futures USA.

Record-high oil prices will slow global oil demand growth this year to 1.03 million barrels per day (bpd), said the IEA, 230,000 bpd less than its previous forecast.

But the adviser to 27 industrialised countries also said demand growth from emerging countries led by China and the Middle East remained strong.

Investors wondered how long demand could hold up given the sharp rise in oil prices, which first hit $100 in January.

"It's not the absolute level, it's the rate," said Evan Smith of Texas-based fund manager U.S. Global Investors.