Oil pauses from decline

By Fayen Wong

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.