UPDATE 5-Brent crude futures turn positive after falling more than $1

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Drop in New York manufacturing orders starts sell-off

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Traders began optimism would pick up in new year

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IEA says global crude demand to grow in 2024

(Updates prices, moves dateline to Houston)

By Erwin Seba

HOUSTON, Dec 15 (Reuters) - Brent crude futures turned positive during a see-saw session, in which it fell more than $1 a barrel at one point on Friday, as traders tried to reconcile signals for oil demand in the coming year.

Brent futures fell 16 cents, or 0.21%, to $76.46 a barrel at 10:38 a.m. (1638 GMT). U.S. West Texas Intermediate (WTI) crude fell 29 cents, or 0.41%, to $71.29. The market tumbled earlier in the session after a New York Federal Reserve Bank manufacturing survey showed a third month of declines in new orders, which could be a sign of weaker demand for oil in the coming year.

"What started the sell off was the sharp drop in the New York manufacturing numbers," said Phil Flynn, analyst at Price Futures Group.

"This market seems a little more sensitive to every new headline," Flynn added. "They're still not sure we've found the bottom to this market."

After the drop, traders took heart from a signalled end to U.S. Federal Reserve interest rate hikes that demand could increase in the coming year.

The dollar fell to a four-month low on Thursday after the U.S. central bank indicated interest rate hikes have likely ended and lower borrowing costs are coming in 2024. The dollar index was broadly steady on Friday.

A weaker dollar makes dollar-denominated oil cheaper for foreign buyers.

World oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, the IEA said in a monthly report.

While that was up 130,000 bpd from its previous forecast, the estimate is less than half of the Organization of the Petroleum Exporting Countries' (OPEC) demand growth forecast of 2.25 million bpd.

"OPEC+ production cuts are likely to keep the oil market in balance at the start of 2024 despite weaker demand, which should allay current oversupply concerns," Commerzbank said.

OPEC+, which groups OPEC and allies led by Russia, in late November agreed voluntary cuts of about 2.2 million bpd lasting throughout the first quarter.

Weak economic data from Germany, Europe's biggest economy, and China, the world's biggest oil importer, weighed on prices, however.

The HCOB German Flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, fell for the sixth consecutive month, declining to 46.7 in December from November's 47.8, below the 48.2 forecast by economists.

Data released by China's statistics bureau on Friday showed refinery runs in November dropped to their lowest level since the start of 2023, as margin pressure on non-state owned refiners saw them cut back production, while sluggish diesel consumption weighed on national fuel demand.

Despite ongoing woes in China's property market, the data also showed a better-than-expected performance in industrial output and improving retail sales, lending some relief to market sentiment amid the country's anaemic post-COVID economic recovery. (Reporting by Erwin Seba; Additional reporting Ahmad Ghaddar and Andrew Hayley Editing by Susan Fenton and Tomasz Janowski)