UPDATE 8-Oil eases as focus shifts from Iran tensions to U.S. crude build

* Oil prices back to year-end levels
* Iranian commander quoted on plans for 'harsher revenge'
* President Trump pulls back from new military action
* Graphic on U.S. petroleum stocks: https://tmsnrt.rs/35DZduT

(New throughout, updates prices, market activity and comments
to settlement)
By Jessica Resnick-Ault
NEW YORK, Jan 9 (Reuters) - Oil prices retreated further on
Thursday, adding to sharp losses in the previous session as the
market shifted focus toward rising U.S. crude stocks and away
from worries about the conflict between the United States and
Iran.
Broadly, prices were moving back toward where they stood
before a Jan. 3 U.S. drone strike killed a top Iranian general,
prompting an Iranian rocket attack on Iraqi air bases hosting
U.S. forces. These events pushed crude to its highest in four
months.
"The way the market gives a geopolitical risk premium and
then takes it right back indicates that the market fundamentally
isn't very strong," said Gene McGillian, director of market
research at Tradition Energy in Stamford, Connecticut. "A lot of
participants in the market think that there's a lot of oil
around the world that consumption doesn't take care of."
After falling 4.1% on Wednesday, Brent crude futures LCOc1
settled down 5 cents at $65.37 a barrel. West Texas Intermediate
CLc1 fell 7 cents to $59.56 after sliding nearly 5% the
previous day.
During European trading hours Iranian media carried reports
of military commanders speaking of further action aimed at
expelling U.S. troops from the region. On Wednesday, U.S. President Donald Trump stepped back from
further military action, depressing oil prices and diverting
attention to a surprise weekly build of 1.2 million barrels in
U.S. crude stockpiles. The build USOILC=ECI , reported on Wednesday by the Energy
Information Administration, shocked the market after analysts
forecast a drop of 3.6 million barrels. analysts maintained their forecast for Brent to
average $64.50 a barrel this year.
Top oil producers led by Saudi Arabia have agreed to reduce
output by as much as 2.1 million barrels per day (bpd) through
the first quarter of 2020. "As geopolitical tensions appear to enter a new equilibrium
... the overall supply conditions in the market tend to favour
oil reverting lower," Harry Tchilinguirian, oil strategist at
BNP Paribas in London, told the Reuters Global Oil Forum.
"U.S. crude oil production remains at a record 12.9 million
bpd ... it is not evident in our opinion that OPEC and its
non-OPEC allies will fully implement the incremental supply
cuts."
Oil and gas ship owners are bracing for higher insurance
bills due to U.S.-Iranian tensions. This could add hundreds of
thousands of dollars to shipping costs that would ultimately be
passed on to fuel buyers, mostly in Asia. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
CHART: U.S. oil biased to retest support at $59.08
Brent oil may test support at $64.67 U.S. petroleum inventories https://tmsnrt.rs/35Hre4S
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