UPDATE 8-Oil falls below $65/bbl in first weekly drop since November

* Brent gives up all gains made after Iranian general killed
* U.S. crude inventories unexpectedly rose last week
* U.S. imposes more sanctions on Iran
* OPEC cut output in December ahead of new OPEC+ deal
* U.S. job growth slows in December

(Updates with settlement prices)
By Collin Eaton
HOUSTON, Jan 10 (Reuters) - Oil fell below $65 a barrel on
Friday in its first weekly loss since late November, erasing the
week's risk premium added since a U.S. drone strike killed a top
Iranian general as investors focused on rising U.S. inventories
and other signs of ample supply.
However, markets were still eyeing the longer-term risks of
conflict, and prices were briefly supported on Friday by new
U.S. sanctions on Iran in retaliation for its missile attack on
U.S. forces in Iraq this week. Also, a Russian navy ship "aggressively approached" a U.S.
Navy destroyer in the North Arabian Sea on Thursday, the U.S.
Navy's Bahrain-based Fifth Fleet said in a statement on
Friday.
Brent crude LCOc1 , the global benchmark, settled at
$64.98, down 39 cents. West Texas Intermediate crude CLc1 fell
52 cents to end at $59.04.
"With the standing down of Iran there was a sense that oil
supplies were pretty safe but now with the institution of
sanctions and this report that a Russian ship was acting
aggressively toward a U.S. ship, it's put a little bit of fear
back into the market place," said Phil Flynn, oil analyst at
Price Futures Group in Chicago.
For the week, Brent had a 5.3% loss and WTI had a 6.4%
decline, with both benchmarks now below where levels were before
the U.S. drone strike killed Iranian general Qassem Soleimani on
Jan. 3.
Iran responded to the U.S. drone strike on Jan. 8 with a
missile attack on Iraqi air bases hosting U.S. forces that left
no casualties. But a Revolutionary Guards commander said Iran
would take "harsher revenge" soon. Still, there has been no disruption to Middle East oil
production as a result of the flare-up in tensions and other
indications this week suggest supply is ample.
U.S. government data on Friday showed job growth slowed more
than expected in December.
Crude inventories in the United States rose unexpectedly
last week and gasoline inventories surged by their most in a
week in four years, the Energy Information Administration said
on Wednesday. EIA/S
"We're heading into a slack (fuel) demand period ahead of
the summer driving season and rising inventories reminded folks
this is still a somewhat oversupplied oil market," said John
Kilduff, partner at Again Capital LLC in New York.
In a bid to tackle any build-up of excess supply, the
Organization of the Petroleum Exporting Countries plus allies
including Russia are embarking on a further cut in production as
of Jan. 1 this year.
Industry surveys, including from Reuters, showed that OPEC
output declined in December ahead of the new pact. Still,
production remains higher than the forecast demand for early
2020, according to some analysts. OPEC/O
But oil prices may find support in coming months due to
improving fundamentals as the United States seems to have
"plateaued on production, and OPEC is sticking with its cuts,"
said Phil Streible, chief market strategist at Blue Line Futures
in Chicago.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: U.S. petroleum inventories https://tmsnrt.rs/35Hre4S
CHART: U.S. oil may stabilize around $59.08 Brent oil may hover above $64.67 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>