* Demand weak in Europe and Asia; supplies ample
* U.S. pending home sales fall unexpectedly in June
* U.S., European Union prepare more sanctions on Russia
(Updates prices to settlement, rewrites throughout)
By Lorenzo Ligato
NEW YORK, July 28 Oil prices dipped on Monday as
signs of excess supplies of North Sea and West African crude and
weak demand in Europe and Asia offset fears of escalating
tensions in Ukraine and the Middle East.
Deepening discounts for physical North Sea and West African
crude weighed more heavily on sentiment in the futures market,
despite indications further sanctions against Russia, a major
oil producer, would likely be coming later this week.
"The market is now focusing on weak fundamentals," said
analyst Gene McGillian of Tradition Energy in Stamford,
Connecticut. "If it wasn't for the geopolitical risk we priced
in, the market would be at an even lower level."
September Brent lost 82 cents to settle at $107.57 a
barrel, after reaching a low of $107.01 earlier in the session.
U.S. crude futures for September delivery lost 42
cents to settle at $101.67, up from an intraday low of $100.90.
North Sea crude oil cargoes for immediate lifting are
trading at deep discounts to later ones, at more than $1.50 per
barrel below the front futures month.
Traders reported about 30 million unsold barrels of West
African crude for lifting in August, and September cargoes were
already becoming available, further depressing the market.
Oversupply in the West African oil market was a bearish sign
the global market was being pressured by weak refining margins
and unseasonably low gasoline demand.
"Weak refining margins in all regions, including the United
States, argue that the situation won't turn around quickly,"
said Michael Wittner, an oil analyst with Societe Generale.
Further pressure on oil prices came from reports that U.S.
pending home sales fell 1.1 percent last month, an unexpected
decline that cast a cloud over the housing market
Despite minimal supply disruptions, global political
tensions continued to underpin oil prices against the backdrop
of weak fundamentals.
Brent and U.S. crude prices pared losses in the afternoon,
as the market digested news that European leaders and the United
States have agreed to impose further sanctions against Russia
for its role in the Ukraine crisis.
A sanctions list of individuals and companies close to
Russian President Vladimir Putin is expected to be released
later this week, though most analysts see little risk the
measures could curtail immediate oil shipments.
Meanwhile, tensions in the Middle East flared again as
Israel warned Gaza residents to evacuate after Palestinian
fighters launched an audacious cross-border raid.
Investors also kept an eye on Libya, where oil production
fell nearly 20 percent to around 450,000 barrels per day, as
violence continued to rip through Tripoli.
(Additional reporting by Rowena Caine in London, Florence Tan
and Theodora D'cruz in Singapore; Editing by Christopher
Johnson, Lisa Von Ahn, Diane Craft and Paul Simao)