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Oil falls sharply; Brent-U.S. spread smallest since January
* Weak China data, gasoline spark Monday's oil selloff
* Brent-U.S (Other OTC: UBGXF - news) . crude spread below $2.60
* Genscape reports Cushing draw of 1.8 mln barrels last week
* Reuters poll forecasts flat U.S. crude stocks (Adds Reuters poll forecasting flat U.S. crude inventories after four-week gain in paragraph 6)
By Barani Krishnan
NEW YORK, Sept 14 (Reuters) - Brent fell almost 4 percent on Monday, narrowing U.S. crude's discount against the global oil benchmark to the lowest level since January, after an industry report of a large supply draw and government data forecasting lower U.S. crude output.
Oil prices saw another tumble with the onset of mid-September trading as soft economic data out of China and weak gasoline prices pressured the market.
But a report from market intelligence firm Genscape estimating a drawdown of about 1.8 million barrels last week at the Cushing, Oklahoma delivery point for U.S. crude helped U.S. crude futures outperform Brent.
"It (Other OTC: ITGL - news) was a big draw," Scott Shelton, commodities specialist at ICAP (LSE: IAP.L - news) in Durham, North Carolina, said, referring to the Genscape estimate, which compares against the previous largest drop of 1.9 million barrels noted for Cushing by the U.S. Energy Information Administration (EIA) in the week ended June 19.
On Monday, the EIA forecast that U.S. shale oil output would drop for a sixth straight month in October.
A Reuters poll, meanwhile, forecast U.S. crude inventories as a whole to have been unchanged last week, after four straight weeks of builds. The EIA will issue official stockpiles data on Wednesday.
Brent settled down $1.77, or 3.7 percent, at $46.37 a barrel, the lowest settlement in two weeks.
U.S. crude, also known as WTI, closed down 63 cents, or 1.4 percent, at $44 a barrel.
The spread between the two (CL-LCO1=R), one of the most popular trades in oil, fell to as low as $2.32, its smallest difference since Jan. 23. It hit a 14-month high above $13 in March when U.S. crude fell to six-year lows.
Barclays (LSE: BARC.L - news) said it expected an even tighter spread.
"While the flat price in WTI crude oil has become more choppy, marked by alternating up-and-down days over the past week, relative performance versus Brent continues to improve," Barclays technical strategist Lynnden Branigan said in a note.
Brent has plunged from a June 2014 high above $115 a barrel to under $47 due to a global oil glut and worries about China's economy.
"We think we are near the floor, but nothing precludes that we temporarily move lower," Harry Tchilinguirian, global head of commodity strategy for BNP Paribas (Xetra: 887771 - news) , told the Reuters Global Oil Forum on Monday.
Oil also fell on Monday after growth in China's investment and factory output missed forecasts in August, reinforcing the possibility that the country's third-quarter growth could be below 7 percent for the first time since the global financial crisis. (Additional reporting by Lisa Barrington in London and Henning Gloystein in Singapore; Editing by Cynthia Osterman, Andrew Hay and Paul Simao)
