Oil prices stabilise after Golan Heights attack

LONDON, July 29 (Reuters): Oil prices were stable on Monday as fears of a widening conflict in the Middle East after a rocket strike in the Israeli-occupied Golan Heights balanced demand concerns to put a floor under last week's price losses.

Brent crude futures lost 33 cents, or 0.41 per cent, to $80.80 a barrel at 1214 GMT. U.S. West Texas Intermediate (WTI) crude futures fell by 29 cents, or 0.38 per cent, to $76.87.

The Brent and WTI benchmarks lost 1.8 per cent and 3.7 per cent respectively last week on sagging Chinese demand and hopes of a Gaza ceasefire agreement.

"A rather muted opening greets oil prices after Middle East tension is back on the menu due to a reported Hezbollah attack," said PVM analyst John Evans, referring to the strike on Golan Heights.

On Sunday Israel's security cabinet authorised Prime Minister Benjamin Netanyahu's government to decide on the "manner and timing" of a response to the attack that killed 12 teenagers and children.

Israel vowed retaliation in Lebanon against Iran-backed Hezbollah, which denied responsibility for the attack. Israeli jets hit targets in southern Lebanon on Sunday.

The tensions have spread to several fronts and are in danger of spilling into a wider regional conflict, sparking investor concerns about the potential impact on crude output from the world's largest oil-producing region. But to date, output has not been affected.