REFILE-Oil falls more than 1% as market awaits response to Saudi oil attacks

(Corrects spelling of City Index firm in paragraph 6)
TOKYO, Sept 17 (Reuters) - Oil fell more than 1% on Tuesday
as the market hung on tenterhooks following attacks on Saudi
Arabian crude facilities that cut the kingdom's production in
half and sent prices soaring by the most in decades.
The attack heightened uncertainty in a market that had
become relatively subdued in recent months due to slowing growth
as the U.S.-China trade war rages and now faces the loss of
crude from Saudi Arabia, usually the supplier of last resort.
A gauge of oil-market volatility on Monday rose to the
highest level since December of last year, and trading activity
showed investors expect higher prices in coming months.
Brent crude was down 77 cents, or 1.1%, at $68.25 a barrel
by 0051, while West Texas Intermediate was down 82 cents, or
1.3%, at $62.08 a barrel.
Crude prices surged by nearly 20% on Monday as they
responded to Saturday's attack, the biggest jump in almost 30
years, before closing around 15% higher.
"With the US 'locked and loaded' awaiting signs from Saudi
Arabia that Iran was involved, tensions in the Middle East could
get worse before they get better. Under these circumstances the
price of oil could remain elevated for some time yet," City
Index analyst Fiona Cincotta said.
"However, let's not also forget that the demand picture
isn't great right now which will dampen the oil price quickly.
Most recently China's industrial production figures disappointed
overnight," Cincotta said.
Saudi Arabia is the world's biggest oil exporter and, with
its comparatively large spare capacity, has been the supplier of
last resort for decades.
The attack on state-owned producer Saudi Aramco's
crude-processing facilities at Abqaiq and Khurais cut output by
5.7 million barrels a day and threw into question its ability to
maintain oil exports.
The company has not given a specific timeline for the
resumption of full output. Refiners in Asia, the world's biggest consuming region, were
scrambling for alternative supplies, while U.S. crude producers
ramped up efforts to export crude and Saudi Arabia tried to
secure refined products.