Oil prices steady, pressured by Japan data, dollar gain

[September 25, 2015]  By Dmitry Zhdannikov and Simon Falush

LONDON (Reuters) - Oil prices were steady at about $48 per barrel on Friday, pressured by a rise in the dollar, weak consumer data from Japan and after analysts from Standard & Poor's ratings cut their oil price assumptions.

Globally traded Brent futures were at $48.19 per barrel at 1124 GMT, up just 2 cents from their last close and erasing earlier Friday gains. U.S. West Texas Intermediate (WTI) futures were up 23 cents at $45.14 a barrel.

The U.S dollar index was up 0.5 percent after U.S. Federal Reserve Chair Janet Yellen suggested the central bank was still on track to raise interest rates later this year.

A stronger dollar puts pressure on oil prices as it makes it more costly for holders of other currencies.

Weak consumer data from Japan also weighed on prices and analysts said the slowing global economic outlook meant that oil prices would likely remain low for months to come.

Oil prices rose more than 25 percent in late August after a slowing rig count and reduction in U.S. crude stocks implied a tightening North American market and an easing of the global oil glut.

However, Brent is still down 24 percent so far in the third quarter, putting it on track for the second largest quarterly drop since 2008.

S&P analysts noted that marginal production costs in places such as the United States were poised to fall due to improved drilling efficiencies, meaning production will not decline as steeply as expected.

"The decline in oil price assumptions represents the prospects of a more prolonged recovery," said S&P analyst Thomas Watters.

"Despite 2015 capital spending cuts of 30-40 percent by many

U.S. exploration and production companies and prices that are lower than many producers' all-in drilling and production costs, there has not been a significant decline in oil production."

S&P cut its Brent and WTI forecasts by $5 to $50 per barrel and $45 per barrel respectively for this year and said it saw 2016 prices at $55 for Brent and $50 for WTI.

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

"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.

In relatively bullish news, China's refined fuel stocks fell 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.

(Editing by David Evans and David Clarke)

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