* Stronger U.S. stock markets lend support to oil
* U.S. crude outperforms Brent, spread thins to Jan. 20 lows
* Coming up: API inventory report at 2030 GMT (New throughout, updates to U.S. session, adds comments, changes byline, previous LONDON dateline)
By Barani Krishnan
NEW YORK, Sept 15 (Reuters) - Oil traded steady to higher on Tuesday, buoyed by gains on Wall Street that helped prices rebound after a tumble in the previous session, ahead of an industry report that's expected to show if U.S. crude stockpiles have fallen after weeks of gains.
The American Petroleum Institute (API) will issue its weekly report on U.S. crude inventories after the market's settlement, at 4:30 p.m. EDT (2030 GMT).
A preliminary Reuters poll indicated that U.S. crude stockpiles likely remained flat last week, after four straight weeks of gains. EIA/S
Even so, market intelligence company Genscape said in an estimate Monday that crude inventories at Cushing, Oklahoma - the key U.S. crude delivery point - fell 1.8 million barrels last week.
The U.S. Energy Information Administration will issue official supply and demand data for last week on Wednesday.
"We're just trading around the edges before tonight's API, in line with the better stock market and predictions of declining U.S. crude production," said John Kilduff, partner at New York energy hedge fund Again Capital.
U.S. crude futures' front-month contract CLc1 was up 70 cents, or 1.6 percent, at $44.70 a barrel by 11:40 a.m. EDT (1540 GMT).
The front-month in Brent LCOc1 , the global oil benchmark, was up 5 cents at $46.42. Brent settled down $1.77, or almost 4 percent, on Monday.
Wall Street's benchmark S&P 500 .SPX index surged 0.8 percent on upbeat U.S. retail sales data for August. .N
U.S. crude's outperformance versus Brent has narrowed the spread between the two benchmarks CL-LCO1=R to 7-1/2 month lows. The differential fell to as low as $1.53 a barrel on Tuesday, the smallest since Jan. 20, after it settled on Monday at $2.37. ID:nL5N11L310
The outlook for U.S. crude improved after positive forecasts this week by the EIA and other influential entities such as the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC).
"The supply-and-demand numbers suggest that the low oil prices are starting to have an impact on U.S. crude oil production growth," said Olivier Jakob, analyst at Petromatrix.
The EIA forecast on Monday that U.S. shale oil output would drop for a sixth straight month in October. ID:nL1N11K1ID
The IEA and OPEC have cut forecasts for non-OPEC and U.S. oil supply, predicting an easing of the global crude glut by next year. OPEC/M
"The market remains oversupplied, but the pace of stock builds is moderating," Energy Aspects said in a report. "The Asian demand outlook is not rosy but it is not collapsing either."