Oil prices broadly steady despite bearish signals

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[October 31, 2019]    By Shadia Nasralla

LONDON (Reuters) - Oil prices were broadly steady on Thursday despite bearish signals from rising U.S. crude oil stocks and weak factory activity in China.

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. REUTERS/Nick Oxford

Brent crude futures were down 4 cents at $60.57 a barrel by 1024 GMT, erasing earlier gains. They had dropped by 1.6% on Wednesday and the contract is set for a monthly decline of about 0.4%.

U.S. West Texas Intermediate (WTI) crude futures were down 14 cents at $54.92. On the month, however, they are set for a rise of about 1.4%, its biggest monthly gain since June.

Factory activity in China shrank for a sixth straight month in October while growth in the country's service sector activity was its slowest since February 2016, official data showed on Thursday.

A protracted trade war between China and the United States has been weighing on the demand outlook for oil.

Releasing third-quarter results, Royal Dutch Shell warned that uncertain economic conditions could slow its $25 billion share buyback program, the world's largest, and had led to a downward revision to its oil price outlook.

The U.S. Federal Reserve cut interest rates for a third time this year on Wednesday, looking to bolster economic growth with a move that could also boost demand for crude.

Yet gains are likely to be capped until inventories start to show sustained declines.

U.S. crude inventories rose by 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analyst expectations for an increase of 494,000 barrels. [EIA/S]

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose for a fourth straight week, gaining 1.6 million barrels last week, the EIA said.

"The U.S. stock report was anything but encouraging," PVM analysts said in a note.

The American Petroleum Institute had previously reported a decline of 708,000 barrels, raising hopes that official figures would also show a fall. [API/S]

Cushioning the bearish crude data, the EIA showed gasoline and distillate inventories continued to draw.

(Additional reporting by Reporting by Aaron Sheldrick in TOKYO; Editing by David Goodman)

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