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IEA expects oversupply to increase with OPEC+ output boost

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Prices supported by Chinese buying and war risks

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Brent and WTI benchmarks fell sharply in previous session

(Updates prices, adds detail and analyst comment, changes

dateline to London)

By Seher Dareen

Sept 12 (Reuters) - Oil prices steadied on Friday as

concern about oversupply and weaker U.S. demand were offset by

supply disruption risks from conflict in the Middle East and

Ukraine.

Brent crude futures rose 11 cents, or

0.2%, to $66.49 a barrel by 0854 GMT and U.S. West Texas

Intermediate crude gained 4 cents to $62.41.

The Brent and WTI benchmarks fell by 1.7% and 2%

respectively on Thursday.

A monthly report from the International Energy Agency on

Thursday said that global oil supply would rise more rapidly

than expected this year because of planned output increases by

the OPEC+ group comprising the Organization of the Petroleum

Exporting Countries and allies such as Russia.

However, OPEC's own report later in the day made no change

to its relatively high forecasts for oil demand growth this year

and next, saying the global economy was maintaining a solid

growth trend.

While there is a risk of a tumble in oil prices, factors

such as tightness in the distillates market, sustained buying

from China to fill inventories and potential sanctions on Russia

and secondary sanctions on its customers are keeping the market

supported, said PVM Oil Associates analyst John Evans.

A drone attack on Russia's northwestern port of Primorsk -

one of the country's largest oil and fuel export terminals - set

fire to a vessel and a pumping station on Friday, the regional

governor said.

On the supply side, India's largest private port operator,

Adani Group, has banned tankers sanctioned by Western countries

from entering all of its ports, three sources told Reuters and

documents show, potentially curbing Russian oil supplies.

India is the biggest buyer of Russian seaborne oil, mostly

shipped on tankers that are under sanctions by the European

Union, United States and Britain.