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UPDATE 8-Oil steadies as U.S. supply ramps up after storm

Jessica Resnick-Ault

* Gulf of Mexico output coming back online after storm

* Coming Up: API's U.S. inventory data 4:30 p.m. (2030 GMT)

* Interactive graphic on U.S. oil sector: (Updates prices and comment, changes dateline from LONDON previously)

NEW YORK, July 16 (Reuters) - Oil prices steadied on Tuesday, paring gains as U.S. offshore crude production resumed after Hurricane Barry and tensions between the U.S. and Iran were seen easing.

Uncertainty about China's economic prospects also pressured prices lower after data on Monday showed that growth in the country slowed to 6.2% from a year earlier, the weakest pace in at least 27 years.

Brent crude futures were up 17 cents at $66.64 a barrel by 11:33 p.m. EDT 1533 GMT 3/8. The international benchmark hit a session high of $67.09 earlier in the day.

West Texas Intermediate crude futures fell by 3 cents a barrel to $59.55. The U.S. benchmark hit a session high of $60.06 earlier.

"Simmering Iranian tensions are still supporting the market, but the risk premium has been reduced," said John Kilduff at Again Capital Management in New York. "Everybody's trying to back away from the heights of the tensions," he added.

Tension between the United States and Iran over Tehran's nuclear programme have kept the market on edge given the potential for a price spike should the situation deteriorate.

Additionally, U.S. oil companies on Monday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry.

Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume.

The storm will probably result in a noticeable decline in U.S. crude oil stocks this week, analysts at Commerzbank said.

Inventory data will be published by the American Petroleum Institute on Tuesday evening, and by the U.S. Department of Energy on Wednesday.

However, some say the bullish inventory data is structural, and not attributable only to the storm.

"Beyond the storm we feel we're in a tightening inventory mode through August," said Phil Flynn, an analyst with Price Futures Group in Chicago.

Market activity has started to slow as it tends to in July and August, the peak European and U.S. holiday season, said Kilduff.

(Additional reporting by Aaron Sheldrick in Tokyo and Bozorgmehr Sharafedin in London; Editing by Marguerita Choy and Kirsten Donovan)