Oil prices rise as firm Chinese seasonal demand offsets weak Japan data

By Henning Gloystein

SINGAPORE (Reuters) - Oil markets rose on Friday as strong seasonal demand from China outweighed weak consumer data from Japan, although analysts said that the slowing global economic outlook meant that oil prices would likely remain low for months to come.

While China's commercial crude oil stocks were virtually flat between July and August, refined fuel stocks sank 7.82 percent, implying strong demand due to two months of consecutive price cuts. Demand was also bolstered by the resumption of coastal fishing and the approaching harvest. [ID:nL4N11M1JZ]

Globally traded Brent futures were at $48.54 per barrel at 0639 GMT, up 37 cents from their last close. U.S. West Texas Intermediate (WTI) futures were at $45.32 a barrel, up 41 cents.

Oil prices rose by over a quarter in late August after a slowing rig count and a reduction in U.S. crude stocks implied a tightening North American market.

Yet a global oversupply that analysts estimate around 2.5 million barrels per day, remains largely in place due to high production elsewhere, for instance in Russia and the Middle East, while demand is slowing, and oil prices have fallen back 10 percent since the beginning of September as the demand outlook has weakened along with economic growth.

Japan's core consumer prices marked the first annual drop since the central bank deployed its massive stimulus programme over two years ago, casting further doubt on whether heavy money printing alone can accelerate inflation to its 2 percent target.

HSBC said that markets had focused too much on China's slowdown, warning that many developed economies were faltering.

"It turns out that developed market imports haven't been anywhere near as robust as relatively upbeat local demand data would suggest ... For all their recent swagger, developed markets are hardly firing on all cylinders. So, don't just blame China," the bank said on Friday.

ANZ bank said that "risks of further downgrades to emerging market economic growth will weigh on investor sentiment and keep any interest in commodities sidelined," adding that it expected WTI to fall by 10 percent within the next three months and Brent to drop 3 percent.

(Editing by Joseph Radford and Subhranshu Sahu)