* U.S. crude stockpile draw trounces forecasts
* Crude futures rise $1 before ending off highs on strong
dollar
* Despite latest stockpile data, global glut still growing
(Writes through with market settling off highs, impact of
stronger dollar)
By Barani Krishnan
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. EIA/S
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. ID:nL1N10929V
Brent LCOc1 settled up 8 cents, or 0.2 percent, at $53.38
a barrel, after a session high at $54.33.
U.S. crude CLc1 finished up 81 cents, or 1.7 percent, at
$48.79. Its intraday peak was $49.52.
Despite the surprisingly strong crude and gasoline drawdown
cited by the EIA, the price rebound on Wednesday paled to the
selloff in oil seen earlier in the week. On Tuesday, Brent
traded at an early February low of $52.28 while U.S. crude fell
to $46.68, its lowest since March.
"It's all a matter of expectations," said David Thompson,
executive vice-president at Powerhouse, an energy-specialized
commodities broker in Washington. "Given the vast majority of
bearish pronouncements on crude over the past few weeks, any
sort of draw was likely to elicit a response like this."
A mounting global surplus of oil has stripped about 8
percent off crude futures so far this year. Notwithstanding the
weekly U.S. stock draw, the build in global inventory is showing
few signs of reversing, analysts say.
A Reuters survey on Tuesday showed members of the
Organization of the Petroleum Exporting Countries produced
around 3 million bpd of oil more than daily demand in the second
quarter. ID:nL5N1083OI
Mike Tran, commodities specialist at RBC Capital Markets,
said U.S. crude could average in the low $50 range through the
balance of the year.
"This remains a supply-driven market. Supply drove us into
this low price environment and supply will have to be what
ultimately digs us out," he said.