CORRECTED-UPDATE 1-Oil near 6-week highs amid Gulf of Mexico storm, Middle East tensions

(Corrects paragraph 2 high for Brent to $67.65, not $67.52)
* Storm Barry halts over half of Gulf of Mexico's oil output
* Brent, WTI hover near their highest since late May
* British tanker incident raises tensions with Iran

By Jane Chung
SEOUL, July 12 (Reuters) - Oil prices rose on Friday,
hovering near six-week highs, as U.S. oil producers in the Gulf
of Mexico cut more than half their output in the face of a
tropical storm and as tensions continued to simmer in the Middle
East.
Brent crude LCOc1 futures were up 29 cents, or 0.4%, at
$66.81 per barrel by 0300 GMT. The international benchmark
settled down 0.7% on Thursday after hitting its highest since
May 30 at $67.65 a barrel.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were
up 31 cents, or 0.5%, at $60.51 a barrel. The U.S. benchmark
marked its highest level since May 23 in the previous session at
$60.94.
By Thursday, oil companies in the Gulf of Mexico had cut
more than 1 million barrels per day (bpd) of output, or 53% of
the region's production, due to Tropical Storm Barry which could
make landfall Saturday on the Louisiana coast. The storm was forecast to become a category one hurricane
with at least 74-mile-per hour (119 km-per-hour) winds.
"Brent crude oil ... extended its gains as storms in the
Gulf of Mexico halted production of oil and U.S. oil inventories
continued to recede more than expected," ANZ Bank said in a
note.
U.S. crude oil inventories have decreased for four
consecutive weeks. Crude stocks fell 9.5 million barrels in the
week to July 5, the Energy Information Administration (EIA)
said, a drop that was more than triple the 3.1 million-barrel
draw expected by analysts.
Kim Kwang-rae, commodity analyst at Samsung Futures in
Seoul, said a sharp drop in U.S. crude stocks and geopolitical
risks are expected to keep both Brent and WTI at current levels.
"As geopolitical risks involving Iran are likely to persist,
that would support WTI to stay above $60 a barrel, while Brent
is expected to stay above $65 per barrel but below $70 for the
time being," Kim said.
Iran's alleged attempt to block a British-owned tanker
heightened tensions in the Middle East in the wake of attacks on
tankers and the downing of U.S. drone by Iran in June.
"While a full-scale military conflict remains the least
likely scenario, the strong increases for cost of insurance will
make for a most costly transportation of crude and see new
routes explored, delaying crude arrivals," said Edward Moya,
senior market analyst at OANDA in New York.
But a lower 2020 oil demand outlook from the Organization of
the Petroleum Exporting Countries kept price gains in check.
OPEC said the world would need 29.27 million bpd of crude from
its 14 members in 2020, down 1.34 million bpd this year.