Oil falls below $108 on excess supply, weak demand
Gaza fighting subsides with Hamas backing 24-hour truce
* Gaza fighting subsides with Hamas backing 24-hour truce
* U.S., EU prepare more sanctions on Russia over Ukrainetrue
* Kurdish crude oil cargo unloads in the U.S. Gulf (Updates prices, detail, comment; paragraphs 3-4, 13, 17-20)
By Rowena Caine
LONDON, July 28 (Reuters) - Brent crude oil slipped below $108 a barrel on Monday as weak demand in Europe and Asia and ample supply in the Atlantic basin outweighed worries over political tensions in Ukraine and the Middle East.
North Sea and West African physical crude markets are over supplied, traders and brokers say, with sellers discounting heavily in an effort to attract buyers such as oil refiners.
September Brent was down 87 cents at $107.52 a barrel by 1150 GMT. Earlier in the session, prices fell by nearly $1 to a low of $107.41. The contract gained 1 percent last week.
U.S. crude futures for September dropped 34 cents to $101.75 a barrel, after ending last week 1 percent lower.
North Sea crude oil cargoes for immediate lifting are trading at deep discounts, more than $1.50 per barrel below the front futures month.
Michael Wittner, oil analyst at Societe Generale, said oversupply in the West African oil market was "a bearish sign":
"Weak refining margins in all regions, including the United States, argue that the situation won't turn around quickly."
Traders reported around 30 million unsold barrels of West African crude for lifting in August, and September cargoes were already becoming available, further depressing the market.
But global political tensions helped underpin oil prices.
In Ukraine, clashes between government troops and pro-Russian rebels intensified on Sunday, killing at least 13.
The United States and the European Union will discuss further economic sanctions on Russia this week, but the market appeared not to be worried by the risk of disruption to oil supplies.
"Market sentiment is still that the sanctions are unlikely to have any material impact on the availability of oil," said Eugen Weinberg, global head of commodities analysis at Germany's Commerzbank.
EU states may ban exports to Russia of sensitive technologies that will help develop the country's oil sector, analysts at Eurasia Group said in a report.
Tension in the Middle East eased a little after Hamas said it backed a 24-hour humanitarian truce. U.S. President Barack Obama had called for a ceasefire, but there was no sign of any comprehensive deal to end fighting with Israel.
Neither Gaza nor Israel is a major oil exporter, but the conflict contributes to ongoing political tensions in other areas in the Middle East.
Investors kept an eye on Libya, where government Special Forces and Islamist militants clashed over the weekend, resulting in at least 36 deaths in Libya's eastern city of Benghazi.
Fuel storage tanks that supply Tripoli were hit on Sunday by rockets igniting a huge fire near the international airport, the National oil corporation (NOC) said.
Libyan oil production fell to around 450,000 barrels per day (bpd) last week, a drop of nearly 20 percent.
"If the situation in Libya worsens and leads to significant oil outages or low exports, then we could see oil prices rising once again," said Abhishek Deshpande, analyst at Natixis.
Iraqi oil exports may increase after the U.S. Coast Guard cleared a tanker to unload a cargo off Texas on Sunday. A State Department official signalled Washington would not intervene to block delivery of the crude. (Additional reporting by Florence Tan and Theodora D'cruz in Singapore; Editing by Christopher Johnson)
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- July 29, 2014
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