Oil prices ease on mixed Middle East signals

SYDNEY, July 24 (Reuters) Oil eased on Monday on renewed diplomatic efforts to resolve conflict in the Middle East, but prices found support above as the violence continued.

U.S. crude for September reversed Friday's bounce, shedding 14 cents to stand at .29 a barrel. London September Brent crude traded down 8 cents at .67 a barrel.

Oil resumed a slide from records above a barrel struck earlier in July on fears the fighting between Israel and Hizbollah could spread, but remains up about 22 percent this year.

''Conciliatory noises from both Israel and Syria are heartening for the Middle East,'' said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia. ''But signals remain fairly muddled and nothing has been resolved as yet.'' ''I think we might see some sideways movement in prices until some of the mixed signals become clearer,'' he said.

Israeli warplanes pounded Lebanon and Hizbollah rockets crashed into Haifa on Sunday as senior U.N. officials demanded a halt to the violence to allow aid to reach desperate civilians.

U.S. Secretary of State Condoleezza Rice, who set out on Sunday evening for the Middle East, has said she will pursue a lasting solution, not an immediate ceasefire. Washington blames Hizbollah and its allies, Syria and Iran, for the conflict.

But Syrian Deputy Foreign Minister Fayssal Mekdad said Syria was ready for dialogue with the United States and wanted an immediate ceasefire, followed by diplomacy to end the war.

Saudi Arabian officials also urged President Bush to seek a ceasefire.

Israeli Defence Minister Amir Peretz said Israel could accept a new international force in the south to keep Hizbollah guerrillas at bay, despite ordering several thousand reserve soldiers to report for duty as signs grew that the army may be preparing for a ground offensive against Hizbollah guerrillas.

Oil prices have proven extremely sensitive to tension in the Middle East, which provides almost a third of the world's oil, although neither Israel nor Lebanon are producers.

Prices eased on Monday despite ongoing U.S. refinery outages, with analysts nervous prolonged shutdowns could affect supply through the peak summer driving season, especially if facilities are hit by strong hurricanes which slashed capacity in 2005.

''Refinery problems are supporting prices,'' said Commonwealth Bank's Gorey. ''Gasoline prices are up on the weekend outages.'' NYMEX gasoline rose SYDNEY, July 24 (Reuters) Oil eased on Monday on renewed diplomatic efforts to resolve conflict in the Middle East, but prices found support above $74 as the violence continued.

U.S. crude for September reversed Friday's bounce, shedding 14 cents to stand at $74.29 a barrel. London September Brent crude traded down 8 cents at $73.67 a barrel.

Oil resumed a slide from records above $78 a barrel struck earlier in July on fears the fighting between Israel and Hizbollah could spread, but remains up about 22 percent this year.

''Conciliatory noises from both Israel and Syria are heartening for the Middle East,'' said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia. ''But signals remain fairly muddled and nothing has been resolved as yet.'' ''I think we might see some sideways movement in prices until some of the mixed signals become clearer,'' he said.

Israeli warplanes pounded Lebanon and Hizbollah rockets crashed into Haifa on Sunday as senior U.N. officials demanded a halt to the violence to allow aid to reach desperate civilians.

U.S. Secretary of State Condoleezza Rice, who set out on Sunday evening for the Middle East, has said she will pursue a lasting solution, not an immediate ceasefire. Washington blames Hizbollah and its allies, Syria and Iran, for the conflict.

But Syrian Deputy Foreign Minister Fayssal Mekdad said Syria was ready for dialogue with the United States and wanted an immediate ceasefire, followed by diplomacy to end the war.

Saudi Arabian officials also urged President Bush to seek a ceasefire.

Israeli Defence Minister Amir Peretz said Israel could accept a new international force in the south to keep Hizbollah guerrillas at bay, despite ordering several thousand reserve soldiers to report for duty as signs grew that the army may be preparing for a ground offensive against Hizbollah guerrillas.

Oil prices have proven extremely sensitive to tension in the Middle East, which provides almost a third of the world's oil, although neither Israel nor Lebanon are producers.

Prices eased on Monday despite ongoing U.S. refinery outages, with analysts nervous prolonged shutdowns could affect supply through the peak summer driving season, especially if facilities are hit by strong hurricanes which slashed capacity in 2005.

''Refinery problems are supporting prices,'' said Commonwealth Bank's Gorey. ''Gasoline prices are up on the weekend outages.'' NYMEX gasoline rose $0.0031 to $2.2925.

ConocoPhillips said its 306,000 barrel-per-day (bpd) Illinois Wood River refinery would not return to service until next week after a power cut, while its 146,000 bpd Texan Borger refinery suffered an equipment malfunction over the weekend.

Valero Energy Corp. shut a gasoline-making unit on Thursday at a Louisiana refinery for unplanned repairs while Total Petrochemicals was performing maintenance on a unit at its 232,000 bpd facility in Port Arthur, Texas.

Reuters AD VP0735 .0031 to SYDNEY, July 24 (Reuters) Oil eased on Monday on renewed diplomatic efforts to resolve conflict in the Middle East, but prices found support above $74 as the violence continued.

U.S. crude for September reversed Friday's bounce, shedding 14 cents to stand at $74.29 a barrel. London September Brent crude traded down 8 cents at $73.67 a barrel.

Oil resumed a slide from records above $78 a barrel struck earlier in July on fears the fighting between Israel and Hizbollah could spread, but remains up about 22 percent this year.

''Conciliatory noises from both Israel and Syria are heartening for the Middle East,'' said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia. ''But signals remain fairly muddled and nothing has been resolved as yet.'' ''I think we might see some sideways movement in prices until some of the mixed signals become clearer,'' he said.

Israeli warplanes pounded Lebanon and Hizbollah rockets crashed into Haifa on Sunday as senior U.N. officials demanded a halt to the violence to allow aid to reach desperate civilians.

U.S. Secretary of State Condoleezza Rice, who set out on Sunday evening for the Middle East, has said she will pursue a lasting solution, not an immediate ceasefire. Washington blames Hizbollah and its allies, Syria and Iran, for the conflict.

But Syrian Deputy Foreign Minister Fayssal Mekdad said Syria was ready for dialogue with the United States and wanted an immediate ceasefire, followed by diplomacy to end the war.

Saudi Arabian officials also urged President Bush to seek a ceasefire.

Israeli Defence Minister Amir Peretz said Israel could accept a new international force in the south to keep Hizbollah guerrillas at bay, despite ordering several thousand reserve soldiers to report for duty as signs grew that the army may be preparing for a ground offensive against Hizbollah guerrillas.

Oil prices have proven extremely sensitive to tension in the Middle East, which provides almost a third of the world's oil, although neither Israel nor Lebanon are producers.

Prices eased on Monday despite ongoing U.S. refinery outages, with analysts nervous prolonged shutdowns could affect supply through the peak summer driving season, especially if facilities are hit by strong hurricanes which slashed capacity in 2005.

''Refinery problems are supporting prices,'' said Commonwealth Bank's Gorey. ''Gasoline prices are up on the weekend outages.'' NYMEX gasoline rose $0.0031 to $2.2925.

ConocoPhillips said its 306,000 barrel-per-day (bpd) Illinois Wood River refinery would not return to service until next week after a power cut, while its 146,000 bpd Texan Borger refinery suffered an equipment malfunction over the weekend.

Valero Energy Corp. shut a gasoline-making unit on Thursday at a Louisiana refinery for unplanned repairs while Total Petrochemicals was performing maintenance on a unit at its 232,000 bpd facility in Port Arthur, Texas.

Reuters AD VP0735 .2925.

ConocoPhillips said its 306,000 barrel-per-day (bpd) Illinois Wood River refinery would not return to service until next week after a power cut, while its 146,000 bpd Texan Borger refinery suffered an equipment malfunction over the weekend.

Valero Energy Corp. shut a gasoline-making unit on Thursday at a Louisiana refinery for unplanned repairs while Total Petrochemicals was performing maintenance on a unit at its 232,000 bpd facility in Port Arthur, Texas.

Reuters AD VP0735