Oil Falls Sharply; Brent-US Spread Smallest Since January

NEW YORK, Sept 14 (Reuters) - Brent fell almost 4 percent on Monday, narrowing U.S. crude's discount against the global oil benchmark to the lowest level since January, after an industry report of a large supply draw and government data forecasting lower U.S. crude output.

Oil prices saw another tumble with the onset of mid-September trading as soft economic data out of China and weak gasoline prices pressured the market.

But a report from market intelligence firm Genscape estimating a drawdown of about 1.8 million barrels last week at the Cushing, Oklahoma delivery point for U.S. crude helped U.S. crude futures outperform Brent.

"It was a big draw," Scott Shelton, commodities specialist at ICAP in Durham, North Carolina, said, referring to the Genscape estimate, which compares against the previous largest drop of 1.9 million barrels noted for Cushing by the U.S. Energy Information Administration (EIA) in the week ended June 19.

On Monday, the EIA forecast that U.S. shale oil output would drop for a sixth straight month in October.

A Reuters poll, meanwhile, forecast U.S. crude inventories as a whole to have been unchanged last week, after four straight weeks of builds. The EIA will issue official stockpiles data on Wednesday.

Brent settled down $1.77, or 3.7 percent, at $46.37 a barrel, the lowest settlement in two weeks.