UPDATE 5-Oil prices firmer, IEA warns of impact on demand

                                
 * IEA warns sky-high prices could crimp growth
                                
 * Goldman told clients to take profit before markets reverse
                                
 * Technicals show retracements for both benchmarks [TECH/C]
                                
 * Coming up: OPEC monthly report, API data at 2030 GMT
                                
 
                                
 (Releads, adds quotes, updates prices)
                                
 By Zaida Espana
                                
 LONDON, April 12 (Reuters) - Brent crude futures pushed up
to around $124.50 a barrel on Tuesday, edging up from a sharp
fall, despite a fresh warning from the International Energy
Agency that high prices could erode demand.
                                
 ICE Brent crude for May <LCOc1> were $1.19 up at $125.17 at
1003 GMT, rallying from a low of $121.97 earlier in the session.
                                
 U.S. crude for May delivery <CLc1> also reversed losses,
taking on 20 cents to $110.12 a barrel. Earlier, prices dipped
to $107.87.
                                
 Mounting worries that strong crude oil prices are denting
demand growth were crystallised by a fresh warning from the IEA,
the West's energy watchdog, which said prices could ultimately
self-regulate through a global economic slow-down. [IEA/M]
                                
 Despite the warnings, analysts said Brent futures were
firmer after the agency kept its forecasts unchanged and the
benchmark should find technical support at around $122 a barrel.
 "The report is not as bad as expected in the sense that
while they talk about potential demand destruction, they have
not changed their numbers," Petromatrix analyst Olivier Jakob
said.
                                
 Analysts also said that a flat reading of Saudi Arabian
production raised questions about spare capacity, which lent
further upside to prices in the session.
                                
 "The IEA shows no rise in their estimate for Saudi Arabia's
crude production in March at a flat 8.9 million barrels per
day," BNP Paribas' head of commodity markets strategy Harry
Tchilinguirian said. "This in turn may raise questions in terms
of Saudi Arabia's willingness, ability or pricing policy to
deliver extra barrels onto the market."
                                
 The IEA warning on prices followed a note from long-term
commodity bull Goldman late on Monday telling clients to take
profit on chances commodity prices may reverse. [ID:nN11117735]
                                
 "There are real risks however that a sustained, $100 per
barrel plus price environment will prove incompatible with the
currently expected pace of economic recovery," the IEA said in
its monthly report.
                                
 "It is a bit surreal but we have a situation where the
Goldman Sachs report is pressuring the market and the IEA report
supporting it," Jakob said.
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  Reuters Insider-Doomsday Scenarios for Oil:
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  For a graphic on speculator positions in U.S. crude:
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 DEMAND CONCERNS
                                
 Societe Generale also weighed into the demand destruction
debate, highlighting gasoline in the United States as the
likeliest first casualty.
                                
 "In the US, where low taxes on refined products for
end-users cause a rapid and direct pass-through of underlying
costs, the focus on increasing gasoline prices has been intense
in both the business and general media," the bank's analysts
wrote in a note. "This has driven mounting concerns in the oil
makets about "demand destruction" in the US."
                                
 "Geopolitics (are) still critical," SG analysts said in the
report. "But with prices high, markets may be having doubts on
demand."
                                
 Demand concerns also heightened in No. 3 oil consumer Japan,
where the evacuation zone around its damaged nuclear plant was
expanded because of high levels of accumulated radiation, as a
strong aftershock rattled the area. [ID:nLDE73B066]
                                
 In the United States, demand has moved sideways, according
to SG. "When compared to an increasing trend for the first three
quarters of last year, this means that demand growth has faded
to zero over the course of the first quarter," SG said.
                                
 On the data front, weekly oil inventory reports from
industry group the American Petroleum Institute (API) will offer
a fresh snapshot of U.S. demand and stockpiles at 2030 GMT.
                                
 Analysts surveyed on Monday expected crude stocks to have
risen last week, with distillate stocks dipping and gasoline
stocks dropping. [EIA/S]
                                
 The U.S. Commodity Futures Trading Commission said that as
of last Tuesday, hedge funds and other financial traders held a
total net-long positions in U.S. crude contracts equivalent to a
near record 267.5 million barrels. [CFTC/]
                                
 "This could be interpreted as an overbought level," ANZ's
analyst Serene Lim said. "If there is bearish sentiment in the
market, it may trigger a sell-off, and a cycle of long
liquidation."
 (Additional reporting by Ikuko Kurahone in London, Chikako Mogi
and Risa Maeda in Tokyo and Florence Tan in Singapore; editing
by William Hardy and James Jukwey)