Oil steadies at $ 58 on expected US inventory drop

TOKYO, Mar 14 (Reuters) Oil prices held around a barrel on Wednesday, steadying from a slide the previous day driven by U.S.

stock market losses, as traders awaited data projected to show falls in U.S. fuel inventories.

U.S. crude for April delivery was trading up 8 cents at .01 a barrel by 0352 GMT, after falling 98 cents on Tuesday when it hit a fresh three-week low. London Brent crude was down 5 cents at .85 a barrel.

Analysts polled by Reuters expect U.S. weekly inventory data due later on Wednesday to show a fall of 2.0 million barrels in distillate stocks, including heating oil, with demand likely remaining strong in the key heating oil market of the U.S. Northeast due to frigid weather.

U.S. gasoline stocks are expected to have declined 2.4 million barrels ahead of peak summer demand. But a projected 1.6 million barrel build in crude stocks, as U.S. shipping delays eased, is seen capping crude gains.

''Today's data would be the key after Tuesday's fall,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. ''If the falls in fuel stocks were only half as much as has been expected, oil's next target would be .'' The market has slid nearly in the past four sessions, after hitting last week, with Tuesday's slide coming as a sell-off in U.S. stock markets added to worrries over the economic health of the world's top oil consumer.

Most other commodities also fell in U.S. trade and Asian shares slumped on Wednesday, tracking Wall Street losses on fears of a crisis in U.S. mortgage lending.

Traders are also looking ahead to OPEC's meeting on Thursday in Vienna, where ministers are expected to leave existing supply curbs of 1.7 million barrels per day in place.

Prices were given some support on Tuesday after the International Energy Agency (IEA), adviser to 26 industrial nations, issued a report saying the world would need extra oil from OPEC in the coming months.

Oil stocks in industrialised nations may be headed for their biggest fall in more than 10 years as OPEC production cuts bite, the IEA said.

Crude supplies from Australia, which were slashed by about a half last week due to a cyclone, are continuing to return to normal as Woodside Petroleum Ltd. said it expects to resume output at its 100,000 barrels of oil per day (bpd) Cossack Pioneer field on Thursday.

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