* Oil market seen very well supplied, inventories ample
* U.S. consumer sentiment near year low
* Algeria crisis renews Mideast/North Africa worries
By Christopher Johnson
LONDON, Jan 21 Brent crude oil slipped below
$112 a barrel on Monday, ending a three-day rally, as pessimism
over global economic growth returned traders' focus to healthy
supply levels, offsetting fears of unrest in North Africa.
Global oil supply exceeded demand throughout 2012, inflating
inventories and providing a sizeable cushion to cope with any
potential supply disruption.
The Organization of the Petroleum Exporting Countries has
begun to reduce output and pumped its lowest volumes in more
than a year in December in an attempt to head off a price fall.
But some investors argue the action may have come too late
and oil prices are likely to slip in the next few weeks.
"The over-riding fundamental feeling in the market is that
crude oil is over-supplied in 2013," said Tony Nunan, an oil
risk manager at Mitsubishi.
March Brent crude futures settled down 18 cents at
$111.71 per barrel. U.S. West Texas Intermediate crude futures
were off 9 cents in overnight electronic trading at
$95.47 a barrel at 1649 GMT, after touching a four-month high
U.S. markets were closed on Monday for a public holiday.
Oil analysts at U.S. brokerage Jefferies Bache say the rally
in U.S. crude futures may be over for a while and the next move
is likely to be downwards.
"We are in process of shifting from a bullish to a bearish
trading stance, with the extent of price declines into month's
end heavily reliant upon economic guidance," they said in a note
Worries about the global economy and its impact on fuel
demand were renewed after a survey released on Friday showed
U.S. consumer sentiment dropped to the lowest level in a year in
January, reflecting uncertainty surrounding the country's debt
Demand worries were accentuated by OPEC's report last week
that indicated oil supply will comfortably outstrip demand in
the first half of 2013, even after an output cut by Saudi Arabia
late last year.
The International Energy Agency said a rebound in China's
demand and Saudi's production cut may tighten the market, but
added it was too soon to be concerned about that.
The U.S. Energy Information Administration said it
expected U.S. crude production to rise by the largest amount on
record in 2013, adding to a global over-supply.
Unrest in the Middle East and North Africa region, the
world's biggest source of crude supply, is still supporting
World attention last week was focused on an Islamic militant
attack on an Algerian gas field, which claimed the live of 80
Western hostages and militants.
Late last week, Libya rushed to beef up security at its oil
fields, and energy firms were considering similar measures in
Egypt as Islamist militants threatened to attack new
installations in North Africa.
(Additional reporting by Robert Campbell in New York and Ramya
Venugopal in Singapore; Editing by Leslie Adler)