Oil Prices Rise As Tighter US Market Offsets Asia Economy Woes

SINGAPORE (Reuters) - Oil prices edged up on a tightening U.S. market on Tuesday but the outlook remained weak as concerns over Asia's economic health mounted and production remained high.

Shares in commodity trading firms, such as Glencore and Noble Group, were hit hard and a Japanese shipper filed for bankruptcy, in the latest signs that tumbling energy and raw material prices are triggering a sector-wide crisis.

Brent crude futures were at $47.64 per barrel at 0721 GMT, up 30 cents from their last settlement, after dropping 2.5 percent on Monday.

U.S. West Texas Intermediate (WTI) futures were at $44.68 a barrel, up 25 cents.

Supporting prices was data estimating a drawdown of over 1 million barrels last week from the Cushing, Oklahoma delivery hub for U.S. crude.

"U.S. production has been falling fast, kick starting the rebalancing process in crude markets," researchers at Energy Aspects said, adding that this could pull U.S. crude production down to 8.8 million barrels per day (bpd) in the fourth quarter, from initial expectations of 9.1 million bpd.

Official figures are due to be released on Wednesday.

Despite this tighter North American outlook, the global outlook remained gloomy. Oil prices, along with most other commodities, have fallen sharply recently, with crude futures losing almost 60 percent of their value since June 2014.

Asian shares skidded to 3-1/2-year lows and the dollar sagged on Tuesday, pulled down by sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy.

"China's industrial profits declined 8.8 percent in August from a year earlier, with the biggest drops concentrated in producers of coal, oil and metals," ANZ said on Tuesday.

On the supply side, Russia's 2015 oil production is expected to increase slightly from last year to 526 million tons, or 10.56 million bpd, deputy minister for natural resources and ecology Denis Khramov said on Tuesday.

That would be up 1 million tons from last year but lower than a forecast of 530.5 million tons by Russia's Economy Ministry, another sign that neither Russia nor the main Middle East producers from the Organization of the Petroleum Exporting Countries (OPEC) are so far willing to curb production in support of prices.

OPEC producers Kuwait and the United Arab Emirates have indicated they will continue to stick to their policy of defending market share by keeping production high over supporting oil prices via output reductions.