* Weak U.S. industrial, manufacturing data weighs on prices
* Saudi oil exports fall for third month in December
* Major powers offer to ease gold sanctions on Iran
* N. Korea prepares for more nuclear tests
By Florence Tan
SINGAPORE, Feb 18 Brent crude rose slightly to
hold close to $118 a barrel on Monday after slipping at the end
last week on signs of slow economic activity in the United
States, although the U.S. and Chinese economies were still
expected to support oil markets.
U.S. economic data on Friday suggested the world's largest
oil consumer hit a bump on its road to recovery in January.
Industrial production fell and manufacturing got off to a weak
start, although a rebound in factory activity in New York state
in February may indicate any setback would be temporary.
Despite the bump, analysts expect recovery in the top two
economies, the United States and China, to support global growth
and commodities demand.
"The U.S. economy is still heading to an upside and it
should support the global economy and equity markets," Tetsu
Emori, a commodities fund manager at Astmax Investments in
Tokyo. "The Chinese should be back in market this week and its
economy is also heading to an upside that should support
Brent crude edged up 15 cents to $117.81 a barrel by
0318 GMT after posting its first weekly loss since January. U.S.
crude slipped 19 cents to $95.67 following a small gain
last week. Oil trading volumes are likely to be lean with U.S.
investors away for a public holiday.
In Saudi Arabia, exports from the world's top crude oil
exporter fell for the third month running in December, but the
fall in shipments was less dramatic than the drop in oil
production, official data showed.
"Saudi's production cut in December and January is also
supporting Brent prices," Emori said.
U.S. housing data due this week could provide more cues on
the country's economic health.
The economic outlook in Japan, the world's third largest oil
consumer, meanwhile, is brightening. The country's expansive
policies, which have driven down the yen, escaped direct
criticism in a G20 meeting, and on Monday Japanese shares have
rallied and the yen continued to fall.
Further nuclear tests in North Korea could ratchet up
geopolitical tensions in North Asia and roil markets.
"North Korea is another headache as far as risk in Asia is
concerned," Astmax's Emori said.
Investors are looking ahead to a Feb. 26 talk between Iran
and major world powers for any progress on deadlocked talks on
Tehran's nuclear programme.
Major powers planned to offer an easing of sanctions on
trading gold and other precious metals with Iran, in return for
Iranian steps to shut down the nation's newly expanded Fordow
uranium enrichment plant, Western officials told Reuters.
U.S. sanctions that came into effect on Feb. 6 are killing
Turkey's gold-for-gas trade with Iran and have stopped
state-owned lender Halkbank from processing other nations'
energy payments to the OPEC oil producer.
(Reporting by Florence Tan; Editing by Tom Hogue)