* Oil holds steady, market watches storm Dolly
* Iran tensions continue to support
(Updates prices)
By Peter Graff
LONDON, July 22 (Reuters) - Oil steadied on Tuesday as a
tropical storm looked unlikely to harm U.S. crude production,
but analysts said it was too early to tell whether last week's
record price slide was over.
Tropical Storm Dolly looked likely to miss major offshore
U.S. oil and gas installations, easing concern of supply
disruptions from the first big storm threat of 2008.
[]
"Barring a veer north, the risks of an oil price disturbing
event are low," Citi analysts said in a research note.
U.S. crude <CLc1> eased 25 cents to $130.79 a barrel by
1018 GMT, after gaining more than $3 a barrel on concerns over
Dolly in the previous session. London Brent <LCOc1> was off 2
cents to trade at $132.59.
Even so, forecasters still expected the storm to grow into a
hurricane before hitting land near the Mexican border and said
it could threaten some coastal refineries later in the week.
Growing worries over the health of the U.S. economy led last
week to the largest oil price fall ever in dollar terms, sending
crude down more than 12 percent from the July 11 high of over
$147.
Simon Wardell of Global Insight in London said it was still
not clear whether the slide was finished, or whether the market
was just pausing before dropping further.
"It did fall an awfully long way so some people may be
putting more money in," he said. "It might be a pause, it might
be a part of a rebound."
A Reuters poll of analysts ahead of Wednesday's weekly U.S.
government inventory data forecast it would show crude stocks
fell by 500,000 barrels, after unexpectedly rising 3.0 million
barrels in the previous week. []
Tensions over Iran's nuclear programme continued to lend
support.
U.S. Secretary of State Condoleezza Rice warned Iran on
Monday that it faced more sanctions if it defied a two-week
deadline to agree to curb its nuclear programme. []
Major powers at the weekend gave Iran, a major oil exporter,
two weeks to answer calls to rein in its nuclear programme or
face tougher sanctions.
Robust fuel demand from China, the world's second-largest
oil consumer, also supported prices.
China in June posted only a modest 3.2 percent increase in
imports of crude oil, but it bought record amounts of diesel,
the General Administration of Customs said, confirming earlier
data. []
(Reporting by Peter Graff in London and Annika Breidthardt
in Singapore, editing by William Hardy/Alex Lawler)
