Brent gives up some gains, heads toward $62 in volatile trade

SINGAPORE (Reuters) - Brent (brent.167)crude gave up some of its gains and dropped toward $62 a barrel on Monday in volatile trading, which saw prices fall to a 5-1/2 year low after the IEA cut its outlook and then rise more than a dollar on hopes of improving manufacturing data.

Brent for January delivery was at $62.05 a barrel at 0425 GMT (11:25 p.m. EST), up 20 cents from its Friday's settlement but 90 cents below the intra-day high of $62.95 a barrel.

Earlier, Brent fell to near $60 after the International Energy Agency forecast further price falls and OPEC's chief defended the group's decision not to cut its output target.

U.S. crude for January delivery was trading at 57.88 a barrel, almost flat with its last settlement, after hitting a low of $56.25 earlier in the day - the lowest since May 2009.

The volatile trading was a result of conflicting factors, with economic indicators supporting prices while supply factors acted as price breaks.

"With preliminary manufacturing PMI scheduled to release this week, it may give some support to falling oil prices," said Singapore-based Phillip Futures on Monday.

"Expectations for this month's PMI are favorable which should prevent a further drop for the week. Provided manufacturing PMI figures are favorable, we expect to see a slight recovery to $61.81 for WTI Feb '15 and $63.26 for Brent Feb '15 for this week," it added.

But a persistent global supply glut is expected to drag on oil prices, with recent comments from Abdullah al-Badri, the head of OPEC, that the group can ride out the slump in prices and keep output unchanged adding to concerns.

(Editing by Himani Sarkar)