LONDON, July 20 (AFP) - Oil prices eased on Tuesday, a day after climbing to seven-week high points in New York and close to record levels amid worries about possible renewed terrorism in the Middle East and supply risks.
The price of Brent North Sea crude oil for delivery in September, the new reference contract, fell 17 cents to 37.73 dollars per barrel in early afternoon deals in London.
New York's light sweet crude benchmark August futures lost also 17 cents to 41.47 dollars per barrel in pre-opening electronic deals.
New York's contract had risen by 39 cents to 41.64 dollars per barrel on Monday, the highest close since the June 1 record finish of 42.33 dollars.
"Frankly, no one really knows where it is going to go from here," a Macquarie Bank trader who wished to remain anonymous said Tuesday.
"The support (buying) levels are far away, about 80 cents below here, and the resistance (selling level) is about 60 cents away to the upside, so you are right in the middle of no man's land," the trader said, adding that the market's focus remained very much on the issue of demand.
Amid a background of rising world demand for oil, the Organization of Petroleum Exporting Countries agreed in June to raise its output ceiling by 2.5 million barrels per day (bpd) in two stages.
OPEC first increased production by two million bpd on July 1 and was set to raise output by a further 500,000 bpd from August 1.
That would bring the production of the 10 OPEC states in the quota system -- Iraq is not included -- to a total of 26 million barrels per day.
OPEC, in its monthly report published Monday, said world oil demand would grow by two percent to 82.56 million bpd in 2005.
"Demand is very very strong," Barclays Capital analyst Kevin Norrish said Tuesday.
"Demand in the US and China is growing rapidly even though they are the two countries that are the most exposed to the dollar price of oil.
"But they are also the two countries that have made the most significant contribution to global growth, which explains their strong oil demand," Norrish added.
Elsewhere, traders were looking ahead to publication Wednesday of the latest weekly estimates of commercial US inventories, expected to show rises in stocks of crude and distillates, but falls in gasoline.