Wires

UPDATE 5-Oil slips towards $65 as Middle East tensions ease

Alex Lawler

* Brent gives up all gains made after Iranian general killed

* U.S. crude inventories unexpectedly rose last week

* OPEC cut output in December ahead of new OPEC+ deal

* U.S. job growth slows in December (Updates prices)

LONDON, Jan 10 (Reuters) - Oil slipped further towards $65 a barrel on Friday as tensions in the Middle East over Iran eased for now and investors focused on rising U.S. inventories and other signs of ample supply.

Iran responded to a U.S. drone strike that killed a top Iranian general on Jan. 3 with a missile attack on Iraqi air bases hosting U.S. forces that left no casualties. But a Revolutionary Guards commander said Iran would take "harsher revenge" soon.

"Hostilities may have ended for the time being, but the longer-term risks of conflict have by no means vanished," said Stephen Brennock of oil broker PVM.

"Set against this backdrop, the threat of supply disruptions in the Middle East is very much alive."

Brent crude, the global benchmark, was down 27 cents at $65.10 by 1415 GMT, and was heading for its first weekly decline in six weeks, down over 4%. U.S. West Texas Intermediate crude slipped 33 cents to $59.23.

Also adding pressure, U.S. government data on Friday showed job growth slowed more than expected in December. Brent is now below where it was before the U.S. drone strike killed Iranian general Qassem Soleimani on Jan. 3.

"There has been some de-escalation, but the return of risk is still there," said Olivier Jakob, oil analyst at Petromatrix.

"The closing hours of Friday are traditionally filled by short-covering due to the impossibility to react during the weekend."

Still, there has been no disruption to Middle East production as a result of the flare-up in tensions and other indications this week suggest supply is ample.

Crude inventories in the United States rose last week by 1.2 million barrels, the U.S. Energy Information Administration said on Wednesday.

That compared with analysts' expectations in a Reuters poll for a 3.6 million-barrel drop.

"There's too much supply out there," a Japan-based based oil executive told Reuters.

In a bid to tackle any build-up of excess supply, the Organization of the Petroleum Exporting Countries plus allies including Russia are embarking on a further cut in production as of Jan. 1 this year.

Industry surveys, including from Reuters, showed that OPEC output declined in December ahead of the new pact. Still, production remains higher than the forecast demand for early 2020, according to some analysts.

"The oversupply on the oil market is sizeable," said Carsten Fritsch, analyst at Commerzbank.

(Additional reporting by Aaron Sheldrick; Editing by Jan Harvey and Mark Potter)