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UPDATE 4-Oil prices mostly steady, but weak Asian economy weighs

Published 15/09/2015, 05:06 pm
© Reuters.  UPDATE 4-Oil prices mostly steady, but weak Asian economy weighs
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* Japan's manufacturing confidence slumps further

* China's slowdown sharper than official data shows - Woodmac

* U.S. prices firmer on expected stock draw

* Venezuela repeats call for OPEC production cut

* Coming Up: API inventory report; 2030 GMT (Adds comment, updates prices)

By Henning Gloystein

SINGAPORE, Sept 15 (Reuters) - Brent crude oil prices edged down slightly on Tuesday as Asia's economic weakness persisted, extending losses into a third session, while U.S. futures firmed following a report that indicated a drawdown in weekly inventory levels.

Market intelligence firm Genscape estimated a 1.8 million-barrel drop last week at the Cushing, Oklahoma delivery point for U.S. crude. A weekly report from the American Petroleum Institute is expected on Tuesday while the U.S. Energy Information Administration's report is expected Wednesday.

Front-month U.S. crude futures CLc1 were trading at $44.15 a barrel at 0647 GMT, up 15 cents from the previous close. Internationally traded Brent contracts LCOc1 , however, were weaker following more gloomy Asian economic news, down 6 cents at $46.31 a barrel. ID:nL4N11K1A2

"With Asian demand slowing, not just due to the contagion from China's economic malaise, but also from rising political risks in countries such as China, Malaysia and Thailand, the outlook for oil market remains hazy," Energy Aspects said.

Japanese manufacturers' confidence slumped the most in a year in September to an eight-month low and is forecast to worsen further as fears of a China-led global economic slowdown grow, a Reuters poll showed. ID:nT9N10I02C

In China, fiscal spending jumped 25.9 percent in August from a year ago as Beijing tries to re-energise flagging economic growth, but stock markets were unimpressed, with China's major indexes down about 4 percent. ID:nL4N11L00Q

"In the first half of 2015, official GDP growth in China came in at 7 percent year-on-year. Official economic growth is in stark contrast to commodity demand growth which has been low through 2015," consultancy Wood Mackenzie said, adding that its China Activity Index implied economic growth of 5.3 percent in Q2 and just 4.5 percent in Q3.

On the supply side, Venezuela repeated its call for the Organization of the Petroleum Exporting Countries (OPEC) to cut output, yet Middle East producers from OPEC - who effectively control the export club - have so far pledged to keep output high in a bid to defend market share against rising competition. ID:nS8N0YN00Z ID:nL4N11K241

Despite the weak immediate outlook, analysts say they are seeing early signs of a rebalancing market.

"The tables are turning - demand (is) slowing but supplies are slowing too," Energy Aspects said.

"The market remains oversupplied, but the pace of stockbuilds is moderating. And should U.S. and OPEC supplies continue on current trajectories, November and December will see small global crude stockdraws," the consultancy added. (Editing by Himani Sarkar)

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