LONDON: World oil prices advanced Wednesday despite news of a stronger-than-expected increase in crude inventories in the United States, analysts said.

US benchmark West Texas Intermediate for delivery in May rose 86 cents to $48.37 a barrel compared with Tuesday's close.

Brent North Sea crude for May added 87 cents to $55.98 in London late afternoon deals.

The US government's Department of Energy (DoE) announced that commercial crude reserves rallied 8.2 million barrels in the week to March 20.

That was far more than market expectations for a gain of 4.7 million barrels, according to analysts polled by Bloomberg.

Rising inventories tend to push prices lower because they indicate weakening demand in the world's biggest crude consuming nation.

"It is a bit peculiar," said Natixis analyst Deshpande Abhishek in response to rising oil prices.

"Markets might be positioning themselves ahead of the potential expected slowdown in US oil production growth.

"Demand is strong in (the) United States, and Europe seems to be improving.

"General weakness in dollar is also supporting oil (prices) to a certain extent."

The weaker greenback makes dollar-priced commodities cheaper for buyers using stronger currencies, which tends to stimulate demand and lift price levels.

"We are seeing the weaker dollar help trigger a small commodity sector revival at the moment," added Saxobank analyst Ole Hansen.

Oil stockpiles in the United States have risen for the past 10 weeks in a row, putting further downward pressure on prices in the face of a global supply glut, with the OPEC crude producing organization also maintaining elevated output levels.

"Inventories remain crucial in judging the oversupply issue," Daniel Ang, an investment analyst with Phillip Futures in Singapore, said in a market commentary.

Data showing an unexpectedly sharp manufacturing slowdown in China is also weighing on sentiment.

China's manufacturing activity contracted in March at its fastest rate in 11 months, British banking giant HSBC said, suggesting worsening conditions in the world's number two economy.

HSBC's preliminary purchasing managers index dipped to 49.2 in March from 50.7 in February.

A number below 50 indicates contraction, and anything above 50 points to growth.

Meanwhile, Wall Street stocks and the dollar slipped on Wednesday as government data signaled the U.S. economic expansion was slowing, while gains in the euro prompted a pullback in European stock markets.

A modest lift at the opening bell for US stocks on news of a deal between Kraft Foods and Heinz Co to create North America's third-largest food company failed to hold, with stocks fading after data showed unexpectedly weak US durable goods orders.

"The dollar strength can sap earnings growth, but if you continue to see soft economic data here, a confirmation of decelerating growth, that will certainly affect the market," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey.

Wall Street's Dow Jones Industrial Average was down 88.71 points, or 0.49 percent, at 17,922.43. The Standard & Poor's 500 Index was down 7.09 points, or 0.34 percent, at 2,084.41. The Nasdaq Composite Index was down 50.75 points, or 1.02 percent, at 4,943.97.

Kraft's shares were up more than $25 to $87.

The pan-European FTSEurofirst 300 index of top companies fell 0.7 percent, as the euro rose, in part because of data showing business in Germany was up.

Germany's Ifo index rose for the fifth successive month to its highest since July 2014, suggesting growth in Europe's largest economy rebounded again in the first quarter of 2015.

The data, based on a survey of 7,000 firms, was stronger than forecast by economists in a Reuters poll and helped push the euro back toward $1.10.

Euro strength hit the exporter-heavy German DAX index , however, prompting some profit-taking, analysts said.

The single currency was last at $1.0963, up 0.4 percent on the day and rising toward Tuesday's peak of $1.1029.

The dollar index, which measures the US currency against a basket of six major currencies, slipped 0.3 percent to 96.932. The yen was up 0.1 percent at 119.60 to the dollar.

Gold slipped but kept close to a 2 1/2-week high on the growing expectation the Fed will not raise rates until September. Spot gold was last at $1,195.80 an ounce.