Oil rose to $72 per barrel on Wednesday after news Chinese manufacturing growth accelerated last month, easing concerns over the pace of economic recovery.
China's purchasing managers' index (PMI) rose to 51.7 in August from 51.2 in July, official data showed on Wednesday, marking the 18th straight month it has stood above the threshold of 50 separating expansion from contraction in the world's second-largest oil user.
European PMIs were less positive, showing manufacturing in the euro zone grew in August at its slowest pace since February. Markets awaited U.S. PMIs later on Wednesday.
Benchmark U.S. crude oil futures for October rose for the first day this week, gaining 10 cents at $72.02 a barrel by 0830 GMT (4:30 a.m. EDT), after touching $71.53 on Tuesday, the lowest intraday price since August 25.
Equities markets rose on Wednesday while the dollar weakened 0.5 percent against a basket of currencies.
The Chinese manufacturing figures are relatively reassuring after some of the data we have had from the United States, said Christophe Barret, global oil analyst at Credit Agricole.
The data reinforce our view that we won't get a double dip recession but the return to growth will be slow and painful.
ICE Brent futures rose 16 cents to $74.80, extending their premium over U.S. crude futures to more than $2.70 per barrel, the highest margin for more than three months.
North Sea crude oil prices are being supported by tighter supplies due to annual maintenance at oilfields and relatively high demand in Europe at a time of high U.S. oil stocks.
Prices tumbled 3.7 percent on Tuesday on signs that U.S. stockpiles rose further last week and bad weather was set to suppress gasoline demand at the end of the driving season.
Appetite for raw materials was also depressed as the minutes of U.S. Federal Reserve's latest meeting showed policymakers saw increasing risks to growth.
Oil fell more than $7 and almost 9 percent in August, its biggest monthly percentage loss since May, as the outlook for the U.S. economy deteriorated. Prices hit a 2010 low of $64.24 on May 20, the weakest front-month price since July 2009, after reaching the peak for this year at $87.15 on May 3.
CRUDE INVENTORIES JUMP
U.S. crude stockpiles jumped 4.8 million barrels last week, the American Petroleum Institute (API) said on Tuesday, more than four times the expected gain of 1.1 million barrels.
Drops in fuel stocks were smaller than the crude increase, at 589,000 barrels for gasoline and 1.9 million barrels for distillates including heating oil and diesel.
The Energy Information Administration (EIA) will publish government statistics on inventories and demand on Wednesday at 1430 GMT. Expectations are for gasoline supplies to have declined 200,000 barrels and distillates to have gained 1.2 million in the week to August 27, a Reuters survey showed.
Hurricanes, now at the peak of the storm season, could potentially have a bigger negative effect on U.S. gasoline consumption than on crude production. They have so far posed little threat to rigs and refineries in the Gulf of Mexico.
Hurricane Earl, a Category 4 with maximum sustained winds of 135 mph (215 km/hour), headed toward North America's east coast and was expected to approach Pennsylvania and New Jersey, home to all the U.S. East Coast's operating refinery capacity of 1.136 million barrels per day.
The U.S. National Hurricane Center said it was monitoring two other systems in the Atlantic, but computer models showed no immediate threat to Gulf of Mexico oil infrastructure.
(Additional reporting by Alejandro Barbajosa in Singapore; editing by William Hardy)