© Reuters. FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS/File Photo

By Robert Harvey

LONDON (Reuters) -Oil prices fell on Tuesday, handing back some of the previous day’s gains, as traders weighed rising crude supply in Libya and Norway against simmering geopolitical tensions in several regions and production outages in the United States.

futures were down 59 cents, or 0.74%, to $79.47 a barrel at 1240 GMT, after trading $1 lower their intra-day nadir.

U.S. West Texas Intermediate crude futures (WTI) were down 54 cents, or 0.72%, to $74.22 a barrel.

Brent slipped back below $80 a barrel after settling above the threshold on Monday for the first time since Dec. 26.

Oil futures remain volatile as uncertainty persists around several supply and demand indicators.

“Traders weigh up economic prospects, interest rates, OPEC+ and the risk of supply disruptions as a result of events in the Red Sea. We’re no clearer on any of these than we were a few weeks ago,” said OANDA analyst Craig Erlam.

Crude prices rose by around 2% on Monday after a Ukrainian drone strike on Novatek’s Ust-Luga Baltic fuel export terminal near Russia’s second city St Petersburg raised supply concerns.

The drone attack was a “timely reminder that a bigger, more influential war is still raging on,” said PVM analyst John Evans.

Tensions also rose in the Middle East, where U.S. and British forces carried out a second joint round of strikes on Houthi positions in Yemen on Monday night.

Norway’s crude production rose to 1.85 million barrels per day (bpd) in December, up from 1.81 million bpd the previous month and beating analysts’ forecasts of 1.81 million bpd, according to the Norwegian Offshore Directorate (NOD).

Meanwhile in Libya, production at the 300,000 bpd Sharara oilfield restarted on Jan. 21 after the end of protests that had halted output since early this month.

But supply remains constrained in the United States. As much as 20% of North Dakota’s oil output was still shut in on Monday, the state’s pipeline authority said.

The weather-induced shutdowns over the last week could see a drop in crude inventories in Tuesday’s American Petroleum Institute (API) weekly report, PVM’s Evans added.

A Reuters poll suggested that {{8849|U.S. crcrude oil inventories would fall by about 3 million barrels in the week to Jan. 19.