OIL PRICE: NEAR $61 YET

REUTERS - Oil prices fell on Wednesday on disappointing economic data from China and a rise in U.S. crude inventories, erasing some of the sharp gains in the previous session after the U.S. said it would delay tariffs on some Chinese products, easing trade tensions.

Brent crude was down 46 cents, or 0.8%, at $60.84 a barrel at 0639 GMT, after rising 4.7% on Tuesday, the biggest percentage gain since December.

U.S. oil was down 62 cents, or 1.1%, at $56.48 a barrel, having risen 4% the previous session, the most in just over a month.

China reported a raft of unexpectedly weak data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies.

"Deteriorating China industrial output and consumer spending suggest the fundamental picture isn't great and the demand for energy may be under the pressure," said Margaret Yang, market analyst at CMC Markets.

Profit taking after Tuesday's sharp gains also weighed on crude prices on Wednesday, analysts said.

"The moves in oil were so outsized overnight, that some profit taking in Asia was logical," said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

Benchmark crude prices surged on Tuesday after U.S. President Donald Trump backed off his Sept. 1 deadline for 10% tariffs on some products affecting about half of the $300 billion target list of Chinese goods.

But with about $110 billion worth of Chinese imports still subject to the tariffs increase next month, the delay will not solve the core issues between the U.S. and China, said Yang.

"Markets will perhaps soon come down to earth and face the reality of a world of elevated trade tariffs, slower growth and policy inconsistency," Yang said.

Markets have been pummeled in recent weeks amid tough talk from Trump on trade.

China's commerce ministry said in a statement on Tuesday that U.S. and Chinese trade officials spoke on the phone and agreed to talk again within two weeks.

Data from industry group the American Petroleum Institute (API) showed U.S. crude stocks unexpectedly rose last week.

Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said.

(Graphic: U.S. crude inventories, weekly changes since 2017 png link: tmsnrt.rs/2y7mC9g).

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