Oil rose on Wednesday, snapping a six-day losing streak, after economic data from China suggested a gradual recovery in the world's No. 2 oil consumer, though weak European data kept the gain slim.
China's economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers signalled, with new orders and output at their highest in months.
Brent crude was up 50 cents at $108.75 a barrel by 1210 GMT, after rising by more than $1 earlier in the session. It had fallen in each of the six previous trading sessions, the longest losing streak in more than two years.
U.S. oil rose 9 cents to $86.76.
However gains were tempered by a grim economic outlook in Europe with businesses across the euro zone suffering their worst month since October, according to PMI data.
Manufacturing PMI in Germany, Europe's largest economy, fell unexpectedly, while business sentiment dropped for the sixth consecutive month.
"Not only do these data points support the slowing economic scenario, but the PMI manufacturing index is an energy sensitive index and directly translates to slower energy demand," said Dominick Chirichella of New York's Energy Management Institute.
"All of the above said, I think it is way too early to conclude that the global economy has stopped slowing or contracting," he said.
Brent oil hit an intraday low of $107.31 on Tuesday, the weakest since Sept. 20 and below its 100-day moving average at $107.42. The U.S. contract slumped by more than 3 percent to touch a session-low of $85.69, the lowest since July 13.
Oil prices have been under pressure because of a weak demand outlook from the world's top two oil consumers.
Investors were awaiting inventory numbers from the Energy Information Administration (EIA) due later in the day to gauge the demand outlook for the United States.
Crude inventories are seen 1.9 million barrels higher for the week ended Oct. 19. All 13 analysts forecast a build in crude stockpiles.
Crude oil inventories as measured by the API increased by 313,000 barrels in the week to Oct. 19, compared with an analyst forecast for an increase of 1.9 million barrels.
Lower supply from Nigeria, Africa's top oil producer, has provided some support to prices, particularly Brent crude, which outperformed U.S. crude.
Nigeria's oil production fell to around 2.1-2.2 million barrels per day (bpd) last week, down from an average of 2.5 million bpd this year, the state-oil company said, following flooding and a major outage on a Shell facility.
Output is now back to normal, an oil industry regulator told Reuters on Wednesday.
"This could certainly be producing a little bit of buying interest in the spreads and therefore forcing backwardation a little wider," said Tony Machacek, a broker at Jefferies Bache in London.
Backwardation refers to a market structure where prices are higher for prompt delivery than for later dates. (Additional reporting Manash Goswami and Florence Tan in Singapore; editing by James Jukwey and Jason Neely)