UPDATE 2-Oil steady near 6-week low, heads for 2nd weekly drop

                                
   * Front-month U.S. crude closest to oversold since May
                                
 * Technicals: Crude to consolidate around $75
[ID:nSGE67J00Z]
                                
 * Coming Up: Euroilstock refinery output, July; 1300 GMT
 (Updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, Aug 20 (Reuters) - Crude was steady near a
six-week trough below $75 a barrel, 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
expiring at the end of Friday trading, added 14 cents to $74.57
at 0645 GMT, and was heading for a second consecutive week of
losses.
                                
 The more active October contract <CLc2>, which will become
the front month from Monday, gained 8 cents to $74.85, while
ICE Brent for October <LCOc1> rose 24 cents to $75.54.
                                
 The frail U.S. economy received fresh setbacks on Thursday
as data showed 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, sending Wall Street lower.
                                
 Japan's Nikkei average fell 2 percent on Friday on worries
of a deepening slowdown, while the dollar stayed within reach
of a 15-year low against the yen, as investors fled risk. [.T]
                                
 "Financial market trends are quite an important factor,"
said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
"Both the money flow and the fundamental side are quite
negative for the oil market now."
                                
 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
                                
 OVERSOLD MARKET
                                
 "In the short term, the market is probably oversold, so
short covering is happening at the moment," Emori said,
referring to sporadic price rebounds during Friday's trading
session.
                                
 A deteriorating U.S. labour market and slowing
manufacturing activity may restrain growth in oil demand at a
time when the country's total petroleum inventories are 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. [ID:nN19254823].
                                
 Japan, the world's third-largest oil user, earlier this
week said economic growth slowed to a crawl in the second
quarter.
 (Editing by Michael Urquhart)