* Brent bounces after hitting near six-month low
* U.S. crude settles up more than 1 pct
* API reports 1.9 million barrel crude draw last week
* Reuters poll called for 200,000 bbl draw in API report (Writes through with API reporting a weekly draw that was nearly 10 times above market expectations)
By Barani Krishnan
NEW YORK, July 28 (Reuters) - Oil prices steadied on Tuesday, with Brent recovering from near six-month lows and U.S. crude settling more than 1 percent higher as bets for a drop in U.S. stockpiles offset concern over a global oil supply glut and China's stock market meltdown.
Trades also cited short-covering after a four-day selloff that wiped between 6 and 7 percent from crude futures prices.
Some stayed convinced, however, that oil has more to lose, and that a bottom for crude futures was still far off.
"We're getting a bounce of sorts but I'll be selling into any strength I see," said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Holllow, New York.
Brent futures LCOc1 settled down 17 cents, or 0.3 percent, at $53.30 a barrel. It had hit $52.28 earlier in the session, its lowest since early February, on concern about the stock market plunge in China, the world's largest energy consumer. ID:nL3N1081IT
U.S. crude futures CLc1 settled up 59 cents, or 1.2 percent, at $47.98 a barrel.
Crude futures came off their lows after expectations grew that U.S. crude inventories had fallen last week. Stockpiles had risen to a five-year seasonal average the previous week.
The American Petroleum Institute (API), an industry group, said after the market settlement that U.S. crude inventories fell by 1.9 million barrels last week. A Reuters poll of analysts had forecast a drop of just about 200,000 barrels. Official data on stockpiles will be issued on Wednesday by the U.S. Energy Information Administration. API/S EIA/S
While the API reported a larger-than-expected crude draw, some brokers were troubled by a big build of 4.3 million barrels in stocks of distillate, including diesel, which they fear could hurt overall sentiment for oil.
Futures of ultralow sulfur diesel HOc1 sank to six-year lows on Tuesday, while gasoline futures RBc1 hit 3-1/2-month lows on worry over ebbing demand for automotive fuels as the U.S. summer driving season draws to a close. The rally in oil products had powered much of the second-quarter recovery in crude prices.
"A 4.3 million barrel distilates build will renew bearish pressure," said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.
U.S. crude futures hit a 2015 high above $62 just three months ago. Technical analysts think the market could lose another $15. ID:nL1N10723E
"Essentially, we see prices staying lower for longer," Virendra Chauhan, analyst at consultancy Energy Aspects, told the Reuters Global Oil Forum.