* IEA says oil market tighter but too early to worry
* US consumer sentiment dipped to a year-low
* Algeria crisis renews Middle East worries
* Coming up: Germany Dec producer prices at 0700 GMT
By Ramya Venugopal
SINGAPORE, Jan 21 Brent futures steadied below
$112 per barrel on Monday as the oil markets cooled after last
week's rally as economic worries and concerns of over-supply
offset fears of renewed unrest in the Middle East after the
The International Energy Agency, which advises industrial
nations on energy policy, said on Friday that the market was
tighter than expected -- though the IEA added it is too early to
declare a return to the bull market. Analysts seemed to agree
more with an assessment by the Organization of the Petroleum
Exporting Countries that supply was greater than demand.
"The IEA may have said the market is tighter, but the
over-riding fundamental feeling in the market is that crude oil
is over supplied in 2013," said Tony Nunan, an oil risk manager
at Mitsubishi in Tokyo.
Front-month Brent futures slipped 21 cents to $111.68 per
barrel by 0209 GMT. U.S. crude shed 25 cents to $95.31 per
barrel after touching a four-month high last week.
Brent may trade in a range between $109-$112 per barrel this
week, Nunan said.
LESS DEMAND, MORE SUPPLY?
Worry on the global economy and impact on fuel demand were
renewed after consumer sentiment in the United States dropped to
the lowest in a year in January, as a result of the uncertainty
surrounding the country's debt crisis.
That added to concern of weakness in the euro zone as well
as sluggish growth in Japan's economy.
Demand worries were accentuated by OPEC's report last week
that indicated that oil supply will comfortably outstrip demand
in the first half of 2013, even after an output cut by Saudi
Arabia late last year.
The IEA said a rebound in China's demand and Saudi's
production cut may tighten the market, but added it was too soon
to be concerned about that.
The U.S. Energy Information Administration (EIA) said
earlier this month that it expects U.S. crude production to rise
by the largest amount on record in 2013.
"This confirms our view that the upward bias to US supply
growth makes it a new source of uncertainty," Deutsche Bank
analysts said in a report.
MIDDLE EAST UNREST
Unrest in the Middle East, the world's biggest source of
crude supply, supported prices.
World attention last week was focussed on an Islamic
militant attack on an Algerian gas field, which claimed 80 lives
of Western hostages and militants.
Around 30 foreigners - including American, British, French,
Japanese, Norwegian and Romanian citizens - are among those
missing or confirmed dead after one of the worst international
hostage crises in decades.
"The crisis underscores the fact that the Middle East is no
safer now," said Nunan.
"There are huge facilities that could be targets, although
on the positive side, it could lead to a beef-up in security."
Late last week, Libya rushed to beef up security at its oil
fields and energy firms were considering similar measures in
Egypt as Islamist militants threatened to attack new
installations in north Africa.
(Editing by Tom Hogue)