Oil eases as global demand concerns return, overshadowing Saudi supply doubts

On Tuesday oil prices eased in early Asian trade as weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand, though lingering uncertainty over Saudi supply disruption broke the drop. Brent crude futures (LCOc1) fell 29 cents to $64.48 a barrel by 0154 GMT, while U.S. WTI futures (CLc1) were at $58.40, down 24 cents.

"The demand side of the equation is back in focus. That's why we're seeing a little bit more (downward) pressure on Brent than West Texas at the moment." - Michael McCarthy, the senior market analyst at CMC Markets in Sydney, said.

Still, oil prices remained at comparatively elevated levels for the year in the wake of the mid-month attack on Saudi Arabia's largest oil processing facility that halved output at the world's top oil exporter.

Saudi Arabia has restored more than 75% of crude output lost after attacks on its facilities by this stage. It will return to full volumes by early next week. But the Wall Street Journal reported on Monday that repairs at the plants could yet take months longer than anticipated.

Britain, Germany and France backed the U.S. in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.

Meanwhile, the preliminary poll found on Monday that U.S. crude oil and distillate stockpiles dropped last week. Seven analysts estimated that crude inventories fell 800,000 barrels in the week to Sept. 20.