US crude oil rose more than $1 on Wednesday, rebounding from recent steep drops after government data showed the country's crude stockpiles fell sharply last week. Domestic crude stocks fell by 7.5 million barrels, the biggest draw since January, the US Energy Information Administration (EIA) said in its weekly report. The drop, caused by a sharp increase in refinery activity, was far greater than the decrease of 2.1 million barrels forecast by analysts.
-- Libya offers first oil from Ras Lanuf port since reopening
"The standout number is the crude drop, because when you see a number like that it gives a reason to cover if you're a little short," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. US crude for August delivery gained $1.24 to settle at $101.20 a barrel, the highest since July 10. The Brent contract for August, which expired on Wednesday, dropped 17 cents to settle at $105.85 a barrel. The September contract, which will be the front-month contract starting Thursday, gained 29 cents to settle at $107.17.
The EIA data showed a 650,000-barrel drop at the Cushing, Oklahoma, delivery point of the US crude contract, which fuelled a rally in the US crude market shortly after the report was released. Gasoline stocks rose 171,000 barrels and distillate stocks rose 2.5 million barrels, the EIA said. "The numbers caught the market by surprise," said Phil Flynn, analyst at Price Futures Group in Chicago. "They reflect the changing dynamics of the crude market: even if demand is not as strong as anticipated, our export market is very good." The increase in the US crude price narrowed the discount to Brent to $4.65, the smallest since mid-April.
The international benchmark received some support from strong Chinese economic data earlier in the session. The country's economy expanded at a 7.5 percent annual pace in the second quarter as a result of government stimulus measures, signalling expectations of increasing demand. China's growth figures, however, were offset by news of rising supplies from Libya, where oil production has recovered to nearly 600,000 bpd. Libya's National Oil Corp has offered the first crude oil from its major eastern Ras Lanuf terminal for end-July loading, two weeks after a rebel group agreed to end its nearly one-year blockade of the country's oil facilities.