* U.S. drilling down for 2nd straight week
* But demand side weakens, global car sales fall
* Coming up: OPEC's monthly report due at 1100 GMT
* Markets eye U.S. Fed meeting this week
(Updates prices, add Barclays (LONDON:BARC) detail)
By Lisa Barrington
LONDON, Sept 14 (Reuters) - Brent crude oil fell on Monday
as weaker-than-expected Chinese data weighed on markets, adding
to concerns that declining global demand would exacerbate a
surplus of crude.
Traders also waited to see whether the U.S. central bank
raises interest rates for the first time in nearly a decade
later this week.
Should interest rates rise, analysts expect oil to fall as a
stronger dollar would undermine demand from importing countries.
Oil prices have fallen almost 60 percent since June 2014 on
the largest global surplus in modern times and concerns about a
slowing Chinese economy.
Growth in China's investment and factory output missed
forecasts in August. A recent run of weak data from the world's
second-largest economy has raised the chances that third-quarter
economic growth may dip below 7 percent for the first time since
the financial crisis. ID:nL4N11G23M
"There has been a very broad-based reaction to China across
commodities, industrial metals and equities," SEB chief
commodities analyst Bjarne Schieldrop said.
Front-month Brent crude futures LCOc1 were down 38 cents
at $47.76 a barrel by 0940 GMT.
U.S. crude futures CLc1 were flat at $44.63 a barrel.
Barclays expects the spread between U.S. crude and Brent to
narrow further from current levels, noting that "relative
performance versus Brent continues to improve".
The International Energy Agency said last week that ongoing
production cuts would lead to a rebalancing of the oil market by
next year. ID:nL5N11H0SC
The U.S. oil rig count fell by 10 to 652 last week, the
second straight weekly drop. ID:nL1N11H1CT
Yet several banks said the immediate outlook remained weak,
with Goldman Sachs (NYSE:GS) and Commerzbank (XETRA:CBKG) cutting their oil price
forecasts last week. ID:nL5N11H2MR
Morgan Stanley (NYSE:MS) said on Monday: "Both the supply and demand
pictures look less favourable over the coming months ... Outside
the U.S., oil fundamentals appear to be slipping seasonally."
Barclays said: "Most producers seem to be coming around to
the fact that 2016 oil and gas prices are unlikely to see a
significant recovery."
Macquarie noted that global auto sales, which fell 1 percent
in August and 0.8 percent in July, were dragging on demand.
Kuwait and Iran have cut their crude prices to Asia to
multi-year lows against top exporter Saudi Arabia as the battle
for market share pits members of the Organization of the
Petroleum Exporting Countries against each other.
ID:nL4N11K241
OPEC's monthly market report will be published later on
Monday.
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GRAPHIC-Kuwait vs Saudi crude price:
http://link.reuters.com/vaf65w
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