(Reuters) - Oil prices held steady at above $112 a barrel on Friday, but analysts and traders said a move to the downside was likely because the UK's Buzzard oilfield was expected to restart this weekend while the demand outlook remained weak.
At 4.36 a.m. EDT December Brent crude oil futures were up 32 cents a barrel but were on course for another weekly loss. U.S. crude was down 9 cents at $92.01 a barrel.
"We have enough supply. Short of any geopolitical or economic shocks, the market will probably grind lower this month," said Jeremy Friesen, a commodities strategist at Societe Generale in Hong Kong.
Nexen NXT.TO, operator of Buzzard, Britain's largest oilfield, said it would resume output on October 21, increasing the supply of crude that underpins the Brent contract.
"The concern is that demand won't be strong enough to absorb the rapid increase in supply," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt.
Maintenance at the Buzzard field tightened supply through late September and early October, strengthening prompt Brent prices and pushing the spread between the European marker and U.S. crude to its widest in a year.
But Fritsch described the market as rangebound, with no strong feeling as to where it will go next as numerous conflicting supply and demand factors offset each other.
"There's a lack of conviction in movements either way, so we have seen some flip-flopping this week with a $1 move up, then a $1 move down," he said.
Ole Hansen, senior commodity strategist at Saxo Bank, agreed. "The market is not able to find any particular drivers so there is not much incentive to push it in either direction," he said.
Brent closed 80 cents down on Thursday after the dollar rose and Goldman Sachs (GS.N) revised its 2013 forecast for Brent down to $110 from $130 a barrel.
"They went neutral after being one of the big bulls - that helped drive the market lower. But the Brent-WTI spread is widening now, so it is basically a Brent move today," Hansen said.
Dominick Chirichella of the Energy Management Institute, suggested that oil markets were entering the "election zone", when market participants start to neutralize their trading books because of uncertainty around the outcome of the U.S. presidential election.
EURO ZONE PROGRESS
Signs of progress in the euro zone debt crisis created a relatively benign mood across the markets on Friday, with European leaders taking steps towards establishing a single banking supervisor.
This opens the way for the bloc's rescue fund to inject capital directly into ailing banks. "It's difficult to see how the market will take this move as anything but a positive," said Gary Jenkins, an analyst at Swordfish.
Oil prices also got support from a shutdown at TransCanada Corp's (TRP.TO) Keystone pipeline, which moves Canadian crude from Alberta to the central United States.
"The Keystone pipeline is expected back online by the 20th, so we're watching how this will turn out," said Ryoma Furumi, a commodities sales manager at Newedge Japan.
Tensions between Syria and Turkey as well as Iran's nuclear ambitions are also keeping a floor under prices.
European Union governments imposed fresh sanctions this week against major Iranian state companies in the oil and gas industry and tightened curbs on the central bank, cranking up financial pressure on Tehran.
Iran is believed to be further increasing its uranium enrichment capacity, Western diplomats said, in another sign Tehran is defying international demands to rein in its nuclear program.
(Additional reporting by Florence Tan; in Singapore; editing by Jane Baird)
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