Oil steady under $139, eyes on U.S. oil demand

                                
 * Oil steadies after steepest slide in 17 years
                                
 * Weak U.S. economic outlook stirs fears about demand
growth
                                
 * Some supply restored in Nigeria, no impact from Brazil
strike
                                
 SINGAPORE, July 16 (Reuters) - Oil was steady on Wednesday,
after falling more than $6 in the previous session, the
steepest slide in dollar terms in 17 years as demand fears
swelled on the worsening prospects of the U.S. economy.
                                
 U.S. crude <CLc1> was 13 cents higher at $138.87 a barrel
by 0105 GMT, off a low of $135.92 overnight and after the
biggest one-day drop since 1991, when prices tumbled at the
start of Operation Desert Storm.
                                
 London Brent crude <LCOc1> inched one cent higher to
$138.76 a barrel.
                                
 "I think what happened yesterday, especially with the
dollar weakening, suggests that the market is taking a little
more focus on the real fundamentals," said Mark Pervan, head of
commodity research at ANZ.
                                
 U.S. Federal Reserve Chairman Ben Bernanke said the weak
housing market and high energy and food prices were putting
additional stress on a U.S. economy already under considerable
strain from the credit crisis fallout. [nN15305285].
                                
 The U.S. dollar fell to a record low against the euro on
Tuesday before recovering some ground. [ID:nN15354418]
                                
 Investors have been pumping cash into oil and other
commodities this year looking for a safe bet against inflation
and a sliding dollar, pushing crude up nearly 50 percent to
over $147 a barrel earlier this month.
                                
 Oil's six-year rally has been kept on the boil by
ballooning demand from developing economies like China and
India.
                                
 But consumers in large economies like the United States,
already feeling the pinch of the credit crunch and housing
crisis, have begun to scale back on energy use, with retail
gasoline demand down more than 5 percent last week from a year
ago, according to MasterCard Advisors. [nN15330822]
                                
 "The market is coming to the realisation that OECD demand
is going to start contracting, even OPEC has trimmed demand
growth," Pervan said.
                                
 Oil cartel OPEC on Tuesday cut its global demand forecast
for 2008 for the fourth time this year, adding that consumption
would continue to slow in 2009. [nL15315733]
                                
 The restoration of production at Chevron's <CVX.N>
120,000-barrel per day (bpd) Escravos pipeline in Nigeria, and
Brazil's Petrobras <PETR4.SA> <PBR.N> oil platforms despite a
five-day workers strike, also weighed on oil prices.
                                
 A revised Reuters poll ahead of weekly U.S. inventory data
to be released on Wednesday forecast U.S. crude stocks fell 2.1
million barrels last week, while gasoline inventories dropped
400,000 barrels and distillates rose by 2.0 million barrels.
 (Reporting by Luke Pachymuthu; Editing by Michael Urquhart)