Oil Rises From Near 6-Month Lows After Big US Stock Drawdown
NEW YORK, July 29 (Reuters) - Oil settled higher on Wednesday, recovering from multi-month lows, after U.S. government data showed a surprisingly large crude stockpile draw that signaled the market may have been wrong in predicting slumping demand for energy.
Crude futures lost more than $10 a barrel over the past month on fear that peak summer demand for gasoline in the United States was not enough to offset a growing global glut in oil supply. A resurgent dollar weighing on commodities and a stock market tumble in No.1 energy consumer China contributed to the decline.
However, data from the U.S. Energy Information Administration showing a 4.2-million-barrel draw in crude stockpiles last week, more than twenty times analysts' expectations for a decrease of 184,000 barrels, indicated demand for energy may have been stronger than some thought.
The draw diverged sharply from the prior week's inventory build, which had taken stockpiles to above a five-year seasonal average.
The EIA also reported that U.S. gasoline demand was up 6.2 percent from the year-ago period, averaging 9.51 million barrels per day over the past four weeks.
"Although just one data point, the latest weekly data may have been enough to provide some support in the face of major headwinds for oil prices," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Brent and U.S. crude futures jumped more than $1 each on the EIA data, before closing off their highs due to a stronger dollar. The U.S. currency gained in later afternoon trading on speculation that the Federal Reserve was on track to hike interest rates by September.
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