UPDATE 9-Oil prices edge up off 3-month lows, but demand concerns persist

* Major benchmarks trading just above 3-month lows
* U.S. EIA cuts 2020 world oil demand growth forecast
* U.S. crude, distillate stocks up, gasoline down -API
* POLL-U.S. crude, refined products seen drawing down last
week
* Coming Up: U.S. govt weekly oil data at 11 a.m./1500 GMT

(Adds API data)
By Stephanie Kelly
NEW YORK, Sept 9 (Reuters) - Oil futures on Wednesday clawed
back some of the losses they sustained in the previous session,
but a rebound in COVID-19 cases in some countries undermined
hopes for a steady recovery in global demand.
Brent crude LCOc1 rose $1.01, or 2.5%, to settle at $40.79
a barrel. The benchmark dropped more than 5% on Tuesday to fall
below $40 for the first time since June.
U.S. crude CLc1 rose $1.29, or 3.5% to settle at $38.05 a
barrel, having fallen nearly 8% in the previous session.
That lifted the major benchmarks off Tuesday's levels near
three-month lows. Prices fell this week after Saudi Arabia's
state oil company Aramco (SE:2222) cut the October official selling prices
for its Arab light oil, a sign of softening demand.
"When strong Middle Eastern producers are willing to
sell-off in lower prices, it is normal that the global market
panics and follows suit," said Paola Rodriguez-Masiu, Rystad
Energy's senior oil markets analyst.
The global health crisis continues to flare with coronavirus
cases rising in India, Britain, Spain and several parts of the
United States. The outbreaks are threatening to slow a global
economic recovery and reduce demand for fuels from aviation gas
to diesel.
"Short-term oil market fundamentals look soft: the demand
recovery is fragile, inventories and spare capacity are high,
and refining margins are low," Morgan Stanley said.
Record supply cuts by the Organization of the Petroleum
Exporting Countries and allies, known as OPEC+, have helped
support prices, but with grim economic figures being reported
almost daily, the outlook for demand for oil remains bleak.
The U.S. Energy Information Administration on Wednesday cut
its 2020 world oil demand growth forecast by 210,000 barrels per
day to 8.32 million bpd. China's factory gate prices fell for a seventh straight
month in August although at the slowest annual pace since March,
suggesting industries in the world's second-biggest economy
continued their recovery from the coronavirus-induced downturn.
In the United States, crude inventories rose 3 million
barrels last week to 504.1 million barrels, industry data from
the American Petroleum Institute showed late Wednesday. Analysts
had expected a draw of 1.3 million barrels. U.S. government inventory data is due on Thursday, delayed a
day by Monday's Labor Day holiday. EIA/S
U.S. crude oil production is expected to fall 870,000 bpd to
11.38 million bpd this year, a less steep decline than
previously forecast, the U.S. government said in its latest
monthly outlook. Further oil production cuts are expected in 2021, according
to the report.