U.S. Markets closed

Brent crude prices slip away from 5-month highs as Japan's industry stutters

* Japan factory output down for 2nd month

* Analysts warn of exposure to jackup rigs (Adds comment, updates prices)

By Henning Gloystein

SINGAPORE, April 30 (Reuters) - Oil prices slipped away from five-month highs in early Asian trading on Thursday as Japanese factory output weakened for the second straight month.

Japanese industrial output fell 0.3 percent in March adding to mounting evidence of an export-driven economy struggling to regain momentum amid slowing global growth.

Brent crude futures dropped to a low of $65.37 a barrel before recovering to $65.76 a barrel by 0715, down 8 cents from their last settlement. WTI crude, however, was up 22 cents at $58.81 a barrel on bullish U.S. stocks data.

The drops followed a session in which prices hit five-month highs after the first crude stock draw in almost half a year at the U.S. Cushing hub.

"Brent and WTI prices closed at the highest level in nearly five months as U.S. crude oil inventories rose by just 1.9 million barrels (compared to more than 5.5 million barrels the previous week)," ANZ bank said on Thursday.

"WTI prices outperformed Brent as crude oil stocks at key U.S storage hub Cushing fell for the first time in five months," it added.

Analysts also said prices would unlikely chase new highs before fundamentals in the market change.

Singapore-based brokerage Phillip Futures said it expected "more range-bound movements moving forward because fundamentals have remained unchanged."

Despite prices hovering close to half-year highs, analysts warned against investment into certain oil sectors, even if prices continued to rise.

"We advise investors to avoid companies that have large business exposure to jackup rigs," Nomura said on Thursday.

"We believe the global jackup rig oversupply is only mid-way through the downcycle... There are 93 uncontracted jackup rig deliveries in 2Q15-4Q16F, which are equal to 17 percent of the global fleet at end-14. We expect this to exert further downward pressure on the current jackup rigs," it added.

(Editing by Michael Perry and Sunil Nair)