* U.S. crude stocks increase
* Chinese factory activity shrinks
* Brent set for small monthly fall, WTI for monthly gain
(Changes dateline to London, updates prices, adds comment)
By Shadia Nasralla
LONDON, Oct 31 (Reuters) - Oil prices were broadly steady on
Thursday despite bearish signals from rising U.S. crude oil
stocks and weak factory activity in China.
Brent crude futures were down 4 cents at $60.57 a
barrel by 1024 GMT, erasing earlier gains. They had dropped by
1.6% on Wednesday and the contract is set for a monthly decline
of about 0.4%.
U.S. West Texas Intermediate (WTI) crude futures were
down 14 cents at $54.92. On the month, however, they are set for
a rise of about 1.4%, its biggest monthly gain since June.
Factory activity in China shrank for a sixth straight month
in October while growth in the country's service sector activity
was its slowest since February 2016, official data showed on
Thursday.
A protracted trade war between China and the United States
has been weighing on the demand outlook for oil.
Releasing third-quarter results, Royal Dutch Shell
warned that uncertain economic conditions could slow its $25
billion share buyback programme, the world's largest, and had
led to a downward revision to its oil price outlook.
The U.S. Federal Reserve cut interest rates for a third time
this year on Wednesday, looking to bolster economic growth with
a move that could also boost demand for crude.
Yet gains are likely to be capped until inventories start to
show sustained declines.
U.S. crude inventories rose by 5.7 million
barrels in the week to Oct. 25, the U.S. Energy Information
Administration said on Wednesday, compared with analyst
expectations for an increase of 494,000 barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub for U.S.
crude futures rose for a fourth straight week,
gaining 1.6 million barrels last week, the EIA said.
"The U.S. stock report was anything but encouraging," PVM
analysts said in a note.
The American Petroleum Institute had previously reported a
decline of 708,000 barrels, raising hopes that official figures
would also show a fall.
Cushioning the bearish crude data, the EIA showed gasoline
and distillate inventories continued to draw.
(Additional reporting by Reporting by Aaron Sheldrick in TOKYO
Editing by David Goodman)
