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Brent crude oil rose towards $50 a barrel on Wednesday as a drawdown in US crude oil stocks outweighed the negative impact of weak economic manufacturing data from China. The American Petroleum Institute (API) said US crude stockpiles fell 3.7 million barrels last week, with stocks at the Cushing, Oklahoma, delivery point for US crude futures down almost 500,000 barrels.
Although total US oil inventories are at record high, the draw suggests a rebalancing of the biggest domestic oil market is under way as oil production slows in the face of low prices.
Benchmark Brent LOCc1 was up 40 cents a barrel at $49.48 by 0320 EDT. US light crude CLc1 was up 45 cents at $46.81. The US industry data helped oil resist the negative impact of a sharp contraction in Chinese manufacturing.
Flagging demand is dragging China's factory sector into its sharpest contraction in six and a half years, a private survey showed on Wednesday, triggering a flight to safety in Asian markets that analysts say could extend across the globe. The preliminary Caixin/Markit China Manufacturing PMI fell to 47.0 in September, its lowest since March 2009. Levels below 50 show a contraction.
Oil prices have been depressed for about a year and are now trading at less than half their peak levels in 2014, thanks to massive oversupply by oil producers in the Middle East and North America.
But many analysts say oil prices could be about to recover, particularly if official US government figures confirm that the oil market there is starting to tighten. The US government's Energy Information Administration will publish its figures at 10:30 am EDT (1430 GMT) on Wednesday.
