Oil futures rally over 1% after large inventory drawdown

Oil futures rose over one percent as the dollar pulled modestly away from a 14-month nadir, following earlier data from the US, the world's largest energy consumer, including the EIA report, which showed a larger than expected US inventory drawdown last week. 

As of 04:43 GMT, US crude futures due on August 16 rose 1.38% to $47.04 a barrel from the opening of $46.40, while Brent crude futures due on September 15 climbed 1.39% to $49.52 a barrel from the opening of $48.84, as the dollar index added 0.08% to 94.68 from the opening of 94.60. 

Earlier US data showed building permits and building starts rose past expectations in June, sending the dollar higher on short-covering away from an eleven-month nadir, as chances of a third Federal Reserve rate hike this year wane considerably. 

Otherwise, the Energy Information Administration released its report on US crude stocks, showing a drawdown of 4.7 million barrels in the week ending July 14, adding to a 7.6M drawdown in the previous reading, while analysts expected only a 3.6M drop, with total stocks now reaching 490.6 million barrels, remaining within the uppermost range on average in this time of year. 

Otherwise, gasoline stocks fell 4.4 million barrels, while distillate inventories, including heating fuel, fell 2.1 million, both remaining within the uppermost range on average in this time of year. 

Similarly, International Energy Agency official Neil Atkinson projected a drop in global oil supply in the second half of this year, underpinning prices, while pointing to the gains as small due to the resilience of US shale production. 

Oil futures are heading for the seventh daily profit in eight days, as the dollar index slides on diminished forecasts for a Fed rate hike later this year. 

Otherwise, earlier data this week from China, the world's second largest economy, showed the seasonally adjusted reading for second quarter GDP growth at 1.7%, matching expectations and up from 1.3% in the first quarter. 

Oil futures were bolstered for the second week in a row as demand climbed in China and overpowered oversupply concerns around the globe. 

China imported 8.55 million bpd of crude oil in the first half of the year, up 14% y/y, making China the world's largest oil importer and overtaking the US in that regard.