UPDATE 2-Brent steadies near $110 after Algeria attack
* Algeria attack lifts prices as Islamist militants take hostages
* Unexpected drop in U.S. crude stocks adds support
* OPEC sees weak crude demand in 2013, IEA report due Fri
* Coming Up: U.S. Housing starts Dec; 1330 GMT
(Recasts, updates prices)
SINGAPORE, Jan 17 (Reuters) - Brent futures steadied near $110 per barrel on Thursday after Islamist militants attacked an Algerian gas field and took Western hostages, although concerns about a weak global economic outlook and demand worries weighed.
Islamist fighters seized dozens of Western and Algerian hostages in a dawn raid on a natural gas facility deep in the Sahara on Wednesday and demanded France halt a new offensive against rebels in neighbouring Mali.
A series of data showing worsening economic conditions in Europe, the ongoing uncertainty surrounding an agreement over the U.S. debt ceiling and a forecast of weak crude demand in 2013 kept prices subdued
Brent added 12 cents to $109.80 a barrel by 0718 GMT. The February contract, which expired on Wednesday, settled 31 cents higher, while the March contract finished 5 cents up. U.S. oil slipped 26 cents to $93.98.
"There is a muddied, unclear economic picture. One day there is a bullish headline, the next day bearish," said Tony Nunan, oil risk manager for Mitsubishi Corp in Tokyo.
"Geopolitical worries will help keep a floor on prices, especially Brent. The recent news is from Algeria, which is supporting prices," he added.
Washington said on Wednesday that U.S. citizens were among the hostages taken when Islamist militants raided a gas facility in Algeria and that Secretary of State Hillary Clinton had telephoned Algeria's prime minister to discuss the incident.
The militants said they had kidnapped up to 41 foreigners, including seven Americans, in the dawn raid in retaliation for France's intervention in Mali, according to media reports. The raiders were also reported to have killed three people, including a Briton and a French national.
Details were sketchy and numbers of those held at Tigantourine ranged from 41 foreigners - including perhaps seven Americans as well as Japanese and Europeans - to over 100 local staff, held separately and less closely watched.
A surprise fall in crude inventory in the United States, the world's biggest oil consumer, offered additional support to oil.
U.S. crude stocks fell by 951,000 barrels to 360.3 million barrels last week as imports dropped and fuel stocks rose, according to weekly data from the U.S. Energy Information Administration on Wednesday. Analysts polled by Reuters had expected stocks to rise by 2.3 million barrels.
"The decline in crude use has taken place from previously elevated levels that had been encouraged by good refining margins," BNP Paribas analysts said in a report.
Imports fell by 312,000 barrels per day (bpd) to 7.99 million bpd in the week. Gasoline supply rose by 1.91 million barrels, compared with analyst expectations for a 2.9 million barrel climb.
WEAK ECONOMY, WEAK DEMAND
Worries about the global economy were revived after the World Bank cut its forecast for world growth in 2013 to 2.4 percent, sharply down from its previous estimate of 3 percent and a notch higher than 2012's 2.3 percent growth.
The World Bank pointed to weak growth in the developed nations as the reason for its downgraded expectations.
Data showing the European car market weakened to a 17-year low reinforced that view, while prospects of an extended battle over the fiscal crisis in the United States further undermined investor confidence.
The decline in economic activity may lead to poor energy demand, and the Organisation of Petroleum Exporting Countries (OPEC) cut its demand forecast for its crude in 2013 by 100,000 barrels per day to 29.65 million bpd.
OPEC's is the second of this month's three closely watched supply and demand reports to be released. The U.S. government's Energy Information Administration last week trimmed its 2013 demand growth forecast by 20,000 bpd.
The International Energy Agency, adviser to 28 industrialised countries, issues its report on Friday.
(Additional reporting by Ramya Venugopal; Editing by Muralikumar Anantharaman and Tom Hogue)