Oil rallies two percent to two-week high after US inventory drawdown

Oil futures rallied to February 7 highs as the dollar index retreated for the first time in five sessions, following earlier data from the US, the world's largest economy, including the EIA report that showed a surprise inventory drawdown last week. 

As of 05:43 GMT, US West Texas Intermediate rose 2.09% to $62.97 a barrel from the opening of $61.68, while Brent futures due on April 15 climbed 1.70% to $66.53 a barrel from the opening of $65.42, as the dollar index shed 0.33% to 89.70 from the opening of 90.00. 

Earlier US data showed unemployment claims fell 7 thousand to 222 thousand from 229 thousand in the previous reading, below expectations of 230K, while continuing claims in the week ending February 10 fell 73 thousand to 1.875 million from 1.948 million, also sharply below forecasts of 1.938 million. 

Federal Reserve Bank of New York President William Dudley spoke earlier today about the economic situation in Puerto Rico and the United States Virgin Islands, following Hurricanes Irma and Maria, at a press briefing hosted by the Federal Reserve Bank of New York

The Energy Information Administration released its report on US crude stocks, showing a deficit of 1.6 million barrels in the week ending February 16, compared to a 1.8M buildup in the previous reading, while analysts expected a 2.2M increase, with total stocks now down to 420.5 million barrels, remaining within the medium range on average in this time of year. 

Gasoline stocks rose 0.3 million barrels, while distillate stocks, including heating fuel, fell 2.4 million barrels, also remaining within the medium range on average in this time of year.

UAE energy minister Suhail Al Mazroui said in earlier remarks that resiliently high supplies in the market represent a source of concern, as OPEC is not the only power to guides the market, while expressing the increased confidence between the oil cartel and other producers such as Russia. 

Otherwise, Bank of America projected Brent prices to steady at $64 a barrel this year, up from $56 in previous forecasts, while expecting them to retreat to $60 in 2019 as US output increases. 

Last Friday, Baker Hughes reported a rise in the US oil rig count by 7 to a total of 798 rigs, up 51 so far this year and the highest since April 2015.