Crude-oil futures were holding steady in Asian trading Tuesday despite worsening global investor sentiment in the aftermath of a downgrade of Spanish banks. Confirmation that South Korea will suspend imports of Iranian oil by July 1 supported crude sentiment. On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $79.08 a barrel at 0625 GMT, down $0.13 in the Globex electronic session. August Brent crude on London's ICE Futures exchange rose $0.10 to $91.11 a barrel. Oil prices fell more than 5% last week due to a gloomy macroeconomic outlook and have continued their slide this week, as hopes remain low of a positive outcome at a summit of European Union leaders due to start Thursday. "Markets appear to be in risk-off mode, pricing in for disappointment ahead of the EU summit--as such, we think any progress could result in a commodity market rally, particularly seen in oil prices," analysts at ANZ said in a note. Moody's downgraded the ratings of 28 Spanish banks late Monday, intensifying pressure on leaders at the upcoming EU summit and weighing on oil prices, as investors fear a slowing economy will hurt demand for the commodity. Market participants will look to U.S. data on consumer confidence due later Tuesday for further cues. South Korea said Tuesday that it will halt oil imports from Iran indefinitely by the end of the week. The EU confirmed this week will impose sanctions from July 1, which will effectively cut off insurance services for shipments carrying crude from Iran. South Korea is the first Asian country to say it will have to suspend oil imports from Iran. India is considering contingencies such as allowing Iranian ships to bring in crude from the country, while Japan is seeking to pass a law that will allow it to provide alternative insurance coverage for tankers carrying Iranian crude. South Korea relies on Iran for around a tenth of its crude-oil requirement, that the Islamic Republic's share fell to 7.5% in the January-May period. In the Gulf of Mexico, oil and gas producers began to restaff offshore operations late Monday after tropical storm Debby weakened and turned away from key producing areas. The storm had interrupted about half of the Gulf's oil production and a third of natural gas output, providing temporary price support Monday. Oil market fundamentals remain bearish, as Chinese demand growth is slowing while supply is ample, analysts at Barclays said. Chinese oil demand growth so far in the second quarter has averaged just 0.7%, the slowest pace since the first quarter of 2009, while Organization of Petroleum Exporting Countries' production by some estimates has remained above 31 million barrels a day for seven straight months, it said. "That swing in balances is at the heart of what remains an extremely negative market sentiment," the bank's analysts said in a note. "While prices have already made a substantial downwards move, the outlook held by the bulk of the market has, if anything, worsened during the period that prices have been falling," they said. Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract--fell 1 point to $2.6457 a gallon, while July heating oil traded at $2.5364, 21 points lower. ICE gasoil for July changed hands at $815.25 a metric ton, up $7.25 from Monday's settlement. Write to Jacob Gronholt-Pedersen at jacob.pedersen@dowjones.com

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