* Front-month U.S. crude closest to oversold since May
* Technicals: Crude to consolidate around $75
[]
* Coming Up: Euroilstock refinery output, July; 1300 GMT
By Alejandro Barbajosa
SINGAPORE, Aug 20 (Reuters) - Crude was steady near a
six-week trough below $75, after weak U.S. economic data
signalled the world's top oil-consuming nation will struggle to
work through the most ample petroleum inventories in two
decades.
U.S. crude for September <CLc1>, the front-month contract
which expires at the end of Friday trading, shed 3 cents to
$74.40 a barrel at 0034 GMT, heading for a second consecutive
week of losses.
The more active October contract <CLc2>, which will become
the front month from Monday, dipped 2 cents to $74.75, while
ICE Brent for October <LCOc1> rose 3 cents to $75.33.
Front-month U.S. crude settled below $75 on Thursday for
the first time since July 12, after touching a trough of $73.83
on Wednesday, the lowest intraday price since July 7.
The contract is now the closest to being oversold it has
been in three months. For a graphic on WTI's relative strength
index:
http://link.reuters.com/tyn26n
"Both the money flow and the fundamental side are quite
negative for the market now," said Tetsu Emori, a fund manager
at Tokyo-based Astmax Co Ltd.
"In the short term, the market is probably oversold, so
short covering is happening at the moment," Emori said,
referring to a modest price rebound earlier on Friday.
The frail U.S. economy received fresh setbacks on Thursday
as new U.S. jobless claims scaled a nine-month high last week
and mid-Atlantic manufacturing shrank in August for the first
time in more than a year.
A deteriorating U.S. labour market and slowing industrial
activity may restrain growth in oil demand at a time when the
country's total petroleum inventories hold at a record high
level according to a weekly series of data which began in 1990.
"These should be limiting factors for the oil market,"
Emori said. "A big improvement of the economic situations of
the U.S., Japan and Europe" would be necessary for prices to
move higher on a sustained basis, he added.
Initial claims for state unemployment benefits increased
12,000 to a seasonally adjusted 500,000 last week, the highest
since mid-November, the Labor Department said, and the third
straight week of gains -- a trend last seen in January.
Financial markets had expected claims to slip to 476,000.
The Philadelphia Federal Reserve Bank said its business
activity index dropped to minus 7.7, the lowest since July
2009, as new orders and shipments fell, sending Wall Street
lower. [].
Japan, the world's third-largest oil user, earlier this
week said economic growth slowed to a crawl in the second
quarter.
The Nikkei average fell 1.3 percent on Friday after the
weak U.S. economic data spurred new worries of a deepening
slowdown and sent the dollar to near a 15-year low against the
yen. []
Against a basket of currencies, the greenback gained close
to 0.1 percent. <.DXY>
"Financial market trends are quite an important factor,"
said Emori.
A large area of disturbed weather off the west coast of
Africa has a low 20 percent chance of developing into a
tropical depression over the next 48 hours, the U.S. National
Hurricane Center said on Thursday. []
(Editing by Michael Urquhart and Ed Lane)
