Oil erased an earlier gain to fall below $50 a barrel on Tuesday after weak U.S. economic data refocused attention on falling global oil demand and forecasts for rising U.S. supplies.

U.S. retail sales unexpectedly fell 1.1 percent in March, indicating subdued consumer spending amid rising unemployment. The U.S. Energy Information Administration (EIA) lowered its 2009 world oil demand forecast.

The latest EIA estimate of global and U.S. oil demand is not yet positive and denote that weak demand is still out there, said Kyle Cooper, director of research at IAF Advisors in Houston.

Combined with the U.S. data showing an unexpected fall in retail sales in March, the latest statistics have taken a little lustre off crude oil futures.

U.S. crude fell 70 cents to $49.35 a barrel at 1337 GMT (9:37 a.m. EDT). ICE Brent crude was off 14 cents to $52.00.

Oil fell more than 4 percent on Monday after the International Energy Agency, adviser to 28 industrialized countries on energy policy, sharply cut its world oil demand forecast for 2009.

The EIA also lowered its world oil demand forecast in a monthly report on Tuesday, but trimmed its estimate by 180,000 barrels per day, a less severe reduction than the IEA.

OPEC, the source of more than a third of the world's oil, publishes its monthly view on Wednesday.

Still, analysts point to some positive indications for the economic outlook and demand for commodities. Industrial output growth in world No. 2 oil consumer China picked up to 8.3 percent in March.

We have a number of signs that economic activity is looking slightly stronger, said Francisco Blanch, head of global commodities research at Banc of America Securities-Merrill Lynch. Probably the worst is behind us.

U.S. INVENTORIES

In addition to the forecasts for global supply and demand, traders will also focus on the latest snapshot of supply in top consumer the United States.

U.S. crude oil supplies rose for the sixth consecutive time last week as imports rebounded, and that could have lifted inventories to the highest in almost 19 years, a Reuters poll of analysts showed on Monday.

The poll of eight analysts showed an average forecast for a 2.2 million-barrel increase in crude inventories.

Industry group the American Petroleum Institute issues its inventory report later on Tuesday. The EIA releases its own data on Wednesday.

Oil has recovered to a $47-$54-range for the past four weeks from a low of $32.40 in December. It is still down by almost $100 from a record high above $147 last July.

(Additional reporting by Barbara Lewis and Gene Ramos; Editing by William Hardy and Sue Thomas)

China Retail sales Merrill Lynch