*

Brent set to fall 3.2% compared with final 2023 closing

price

*

Weak demand, ample supply could keep oil prices at $70 in

2025

*

US oil production hit record high in October, EIA says

*

Trump could ramp up Iranian oil sanctions next year,

tightening

global supplies

(Updates with US midday trading, adds byline, dateline)

By Robert Harvey and Georgina McCartney

LONDON/HOUSTON, Dec 31 (Reuters) - Oil prices were set

to end 2024 with a second-straight annual loss on Tuesday as the

post-pandemic demand recovery stalled, China's economy

struggled, and non-OPEC producers including the U.S. pumped more

oil into a well-supplied global market.

Brent crude futures rose 61 cents, or 0.82%, to

$74.60 a barrel as of 12:11 p.m. EST (1711 GMT), while U.S. West

Texas Intermediate crude gained 68 cents, or 0.96%, to

$71.67 a barrel.

The Brent benchmark was down around 3.2% from its final 2023

closing price of $77.04, while WTI was roughly flat with last

year's final settle.

In September, Brent futures closed below $70 a barrel for

the first time since December 2021, and this year broadly traded

under highs seen in the past few years as the post-pandemic

demand rebound and price shocks of Russia's 2022 invasion of

Ukraine began to fade.

The highest closing price of 2024 was $91.17 a barrel,

marking the lowest annual high since 2021.

Oil prices are likely to be constrained near $70 a barrel

in 2025 as weak demand from China and rising global supplies are

expected to cast a shadow on OPEC+-led efforts to shore up the

market, a Reuters monthly poll showed on Tuesday.

A weaker demand outlook in China in particular forced both

the Organisation of the Petroleum Exporting Countries and the

International Energy Agency to cut their oil demand growth

expectations for 2024 and 2025.

With non-OPEC supply also set to rise, the IEA sees the oil

market going into 2025 in surplus, even after OPEC and its

allies delayed their plan to start raising output until April

2025 against a backdrop of falling prices.

U.S. oil production rose 259,000 barrels per day to a record

high of 13.46 million bpd in October, as demand surged to the

highest levels since the pandemic, data from the U.S. Energy

Information Administration showed on Tuesday.

Output is set to rise to a new record of 13.52 million bpd

next year, the EIA said.

U.S. product supplied for crude oil and petroleum, a proxy

for demand, rose 702,000 bpd to 21.01 million bpd in October,

the highest since August 2019, according to the EIA.

ECONOMIC, REGULATORY OUTLOOK

Investors will be watching the Federal Reserve's rate-cut

outlook for 2025 after central-bank policymakers this month

projected a slower path due to stubbornly high inflation.

Lower interest rates generally incentivize borrowing and

spur economic growth, which in turn is expected to boost oil

demand.

Meanwhile, supply could tighten next year, some analysts

have said, depending on the new U.S. administration's sanctions

policies.

Traders are gearing up for President-elect Donald Trump's

policies around looser regulation, tax cuts, tariff hikes and

tighter immigration. Trump's calls for an immediate ceasefire in

the Russia-Ukraine war, as well as the possible re-imposition of

the so-called maximum pressure policy towards Iran could also

have major implications for oil markets.

"With the possibility of tighter sanctions on Iranian oil

with Trump coming in next month, we are looking at a much

tighter oil market going into the new year," said Phil Flynn, a

senior analyst for Price Futures Group, also citing firming

Indian demand and recent stronger Chinese manufacturing data.

China's manufacturing activity expanded for a third-straight

month in December, though at a slower pace, suggesting a blitz

of fresh stimulus is helping to support the world's

second-largest economy.

Buoying prices on Tuesday, the U.S. military said it carried

out strikes against Houthi targets in Sanaa and coastal

locations in Yemen on Monday and Tuesday.

The Iran-backed militant group has been attacking commercial

shipping in the Red Sea for more than a year in solidarity with

Palestinians amid Israel's year-long war in Gaza, threatening

global oil flows.