By Henning Gloystein SINGAPORE (Reuters) - Oil markets saw volatile trading in Asia on Monday as Brent prices first fell to a 5-1/2 year low after the IEA cut its outlook and then rose on hopes of improving manufacturing data. In early trading, Brent futures fell to near $60 per barrel after the International Energy Agency forecast further price falls and OPEC's chief defended the group's decision not to cut its output target. Analysts said that oil markets were oversupplied as a result of rising output being met by cooling demand. "Softer global demand, coupled with unprecedented growth in supply are weighing on global oil indices, with prices falling to levels not seen since the global financial crisis," National Australia Bank said on Monday. National Australia Bank said it had cut its Brent forecast to average $80 in the fourth quarter of 2014, $75 in the first quarter of 2015 and $80 as an average price all of next year. Despite the weak outlook, oil prices recovered from their lows on Monday as some traders expected improving economic data to be published this week. Brent for January delivery was at $62.63 a barrel at 0650 GMT, up 78 cents from Friday's settlement, but more than 30 cents below the intra-day high of $62.95 a barrel. U.S. crude for January delivery was trading at 58.39 a barrel, up 58 cents after hitting a low of $56.25 earlier in the day - the lowest since May 2009. "With preliminary manufacturing PMI scheduled to release this week, it may give some support to falling oil prices," said Singapore-based Phillip Futures. "Expectations for this month's PMI are favourable which should prevent a further drop for the week. Provided manufacturing PMI figures are favourable, 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.