Oil Steady at $60 on Hopes of Strong U.S. Data

Outlook remains weak as OPEC says won't cut production; Brent could drop below $60, WTI to $50.

Brent crude steadied around $60 a barrel on Tuesday, under pressure from a supply glut but supported by forecasts of stronger economic data from the United States, the world's biggest oil consumer.

Figures from the U.S. Commerce Department later in the day are expected to show a buoyant economy with third-quarter growth likely revised up to 4.3 percent from 3.9 percent, despite slowing growth in other parts of the world.

Expectations of robust U.S. data pushed prices higher in thin trading. Tuesday is a public holiday in Japan and many Western markets have slowed ahead of the long year-end break.

North Sea Brent crude has almost halved in price over the last six months and reached a five-and-a-half-year low of $58.50 last week. It has struggled since then to move far above $60.

Brent for February was up 15 cents at $60.26 by 0930 GMT. U.S. light crude rose more than a dollar to a session high of $56.85 a barrel in early trade before retreating to around $55.70.

"With the U.S. economy picking up, we expect the figures to be favorable," brokerage Phillip Futures said in a note.

"Durable goods orders depict a strong manufacturing sector which implies a higher industrial use of crude oil."

As new sources of crude come on stream in North America, oil markets are exceptionally well supplied with inventories brimming in many countries.

But the Organization of the Petroleum Exporting Countries, which pumps around a third of the world's oil, has said it will not reduce production. Officials say OPEC producers are worried they will simply lose market share if they cut output.

Saudi Arabia's powerful oil minister, Ali al-Naimi, has argued it is not in the group's interest to cut oil output however far prices may fall.

"Whether it goes down to $20, $40, $50, $60, it is irrelevant," Naimi was quoted by the Middle East Economic Survey as saying in an interview.

Arab OPEC producers expect oil to rebound to between $70 and $80 by the end of next year as a global economic recovery revives demand, OPEC delegates told Reuters this week.

"Brent could drop below $60 per barrel over the next six months, and WTI could fall to $50, as global oil inventories build sharply from here," Bank of America Merrill Lynch said in a research note.

"Oil could rebound sharply by the end of 2015," it added.

By Christopher Johnson