Oil slips towards $107 as supply worries ease

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Brent crude oil fell towards $107 a barrel on Tuesday as worries about supply disruptions in the Middle East eased, though investors were wary that more negative headlines from Egypt could trigger renewed volatility.

Egypt's interim rulers, aiming to defuse a tense situation after 51 people were killed in violence on Monday, issued a faster-than-expected timetable for elections to try and drag the country out of crisis.

Brent fell 22 cents to $107.21 by 1348 GMT, after slipping to a session low of $106.85 earlier. U.S. crude fell 36 cents to $102.78, recovering from a low of $102.31.

"It seems that some stress has come out of the system and there's a perception that things are going in the right direction," said Maarten van Mourik, economist at Rotterdam-based Argos Energies.

Brent is still up more than $7 per barrel from mid-June, lifted by a better macro-economic backdrop and Middle East supply worries. It gained 5.4 percent last week, its biggest gain in a year.

Fears persist that the turmoil in Egypt could disrupt traffic through the Suez Canal, a conduit for the shipment of a major portion of the world's oil.

Van Mourik said further negative headlines from Egypt, or elsewhere in the region, could trigger more spikes in the oil price.

Highlighting the fragile situation in other parts of the Middle East, 53 people were wounded by a car bomb blast in Beirut's southern suburbs on Tuesday, a stronghold of the Lebanese Shi'ite Hezbollah militant group that has been fighting in Syria's civil war.

However, improved supply from elsewhere in the region helped push oil prices lower for now.

Libya's major Sharara oilfield will resume operations after an agreement was reached with the armed group that had shut it down last month, a senior Libyan oil source said on Monday.

The flow of crude from Kirkuk in Iraq to the port of Ceyhan in Turkey will resume in two to three days after being interrupted for weeks due to a pipeline leak, two sources in Iraq's state-run North Oil Company (NOC) said on Monday.

Investors are now waiting for a raft of data this month on China's economy that could show growth in the world's No. 2 oil consumer grinding towards a 23-year low, according to a Reuters poll.

Data on Tuesday showed Chinese consumer inflation accelerated more than expected in June, limiting room for monetary policy loosening to underpin the economy.



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