By Christopher Johnson
LONDON (Reuters) - Brent crude oil rose towards $50 a barrel on Wednesday as a drawdown in U.S. crude oil stocks outweighed the negative impact of weak economic manufacturing data from China.
The American Petroleum Institute (API) said U.S. crude stockpiles fell 3.7 million barrels last week, with stocks at the Cushing, Oklahoma, delivery point for U.S. crude futures down almost 500,000 barrels.
Although total U.S. oil inventories are at record highs, 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 for November was up 50 cents a barrel at $49.58 by 1410 GMT. U.S. light crude for November traded up 30 cents at $46.66.
The U.S. industry data helped oil resist the negative impact of a sharp contraction in Chinese manufacturing, which darkened the outlook for the world economy.
Flagging demand is dragging China's factory sector into its sharpest contraction in 6-1/2 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 Purchasing Managers' Index fell to 47.0 in September, its lowest since March 2009. Levels below 50 show a contraction.
Oil prices have been weak for over a year and are now less than half their peak levels in 2014 thanks to massive oversupply by oil producers in the Middle East and North America.
Some analysts say oil prices could be about to recover, particularly if official U.S. government figures confirm that the oil market there is starting to tighten.
The U.S. Energy Information Administration will publish its figures at 10:30 a.m. EDT (1430 GMT) on Wednesday.
"If the EIA confirms the crude draw this afternoon, the market could go even higher," said Tamas Varga, analyst at London brokerage PVM Oil Associates. "It is now not unreasonable to expect higher prices."
Investors remain worried about China.
"China's economic slowdown continues, with factory output and investment growth both failing to hit targets," oil consultancy Energy Aspects said.
"With the economy showing little sign of recovery, the 7 percent GDP growth target set by the government may prove difficult to achieve," it added.
Energy Aspects said it expected global crude demand for the second half of the year to grow at only 1 million barrels per day (bpd), down from almost 2 million bpd in the first half.
(Additional reporting by Henning Gloystein in Singapore; Editing by William Hardy and Louise Heavens)
