* Oil flat around $70 after biggest drop in over two weeks
* Weekly API data expected to show fall in U.S. crude
stocks
* China PMI edges up; US manufacturing index seen expanding
* OPEC meet next week likely to keep supply targets steady
(Updates with prices)
By Jennifer Tan
SINGAPORE, Sept 1 (Reuters) - Oil was little changed at $70
a barrel on Tuesday, after a 4 percent fall the previous day,
as Chinese stocks recovered their poise following manufacturing
sector data that suggested China's economic recovery was on
track.
The release of a key gauge of U.S. manufacturing activity
in August and weekly crude inventory data later in the day,
both of which are expected to show a gradual rebound in the
U.S. economy and oil consumption, will set the trading tone for
the market.
By 0230 GMT, U.S. crude for October delivery <CLc1> was up
32 cents at $70.28 a barrel, after falling 3.8 percent on
Monday. London Brent crude rose 35 cents to $70.00 a barrel.
Crude has chalked up a monthly gain of 0.73 percent as at
Aug. 31.
China's benchmark Shanghai stocks index <>, an
increasingly important gauge of global market sentiment, traded
either side of parity on Tuesday after diving 6.74 percent to a
three-month low on Monday, spooking global risk markets on
worries that the Chinese government was tightening bank lending
to moderate growth and curb speculation. []
Underpinning sentiment, HSBC's China Purchasing Managers'
Index (PMI) on Tuesday showed a rise in August to a 16-month
high of 55.1, from 52.8 in July, as a jump in both output and
new orders underscored signs of a recovery. []
In the United States, the Institute for Supply Management's
manufacturing gauge -- due at 1400 GMT -- is expected to have
risen to 50.5 in August from 48.9 in July, which would bring it
into positive territory for the first time since the recession
began, a Reuters poll of economists showed.
"The U.S. ISM data is quite important and will set the
tone. If the data comes out worse than expected, we could see
the market fall further towards $65," Ben Westmore, commodities
analyst with the National Australia Bank.
Weekly oil inventory data from the American Petroleum
Institute (API), due at 2030 GMT, will also provide trading
cues.
U.S. crude stocks likely fell 400,000 barrels last week,
helped by a slight rise in refinery utilisation, a preliminary
Reuters poll of analysts showed.
The U.S. Energy Information Administration (EIA) will
release its own data on Wednesday.
On the supply front, the Organization of the Petroleum
Exporting Countries is likely to leave output targets unchanged
when will meet to consider oil output policy on Sept. 9 in
Vienna, several ministers and officials have
said.[]
Even though OPEC agreed to 4.2 million barrels per day of
supply curbs late last year, and has kept output targets steady
so far in 2009, actual production has been rising in recent
months, according to industry surveys.
(Editing by Ben Tan)
