Brent climbs by over $1 on crude stock draw, US eco data

Brent crude climbed by more than USD 1 a barrel on Thursday on an unexpected fall in US crude inventories and a rally in global equity markets, but a stronger dollar capped gains.

Front-month Brent LCOc1, the global oil benchmark, had gained USD 1.10 to USD 44.24 a barrel by 0300 GMT (11.00 p.m. EDT), having ended down 7 cents at USD 43.14 on Wednesday.

US crude's front-month contract CLc1 rose 91 cents to USD 39.51 a barrel, after settling down 71 cents, or 1.8 percent, at USD 38.60 a barrel.

"The local region is ... shrugging off some of the currency impact, instead pricing in the draws on inventory and a better than expected industrial outlook," said Michael McCarthy, chief market strategist at CMC Markets in Australia.

US crude inventories USOILC=ECI fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June, data from the Energy Information Administration showed on Wednesday. That was in line with the industry group the American Petroleum Institute's late-Tuesday report. Analysts had expected an increase of 1 million barrels.

But some said the inventory drop may not mark the start of a trend.

"This sudden drop in inventories should be the result of drops in US crude imports, suggesting that this week could be an anomaly," said Daniel Ang, an investment analyst at Phillip Futures Pte Ltd said.

Wang Tao, a Reuters market analyst for commodities and energy, said Brent crude may approach resistance at USD 44.64 per barrel again, as its bounce from the Aug. 24 low of USD 42.23 seemed to be incomplete.

In other financial markets, a rebound on Wall Street helped soothe investors' tattered nerves, while the dollar rallied as risk aversion eased.

Regaining confidence after a sharp rebound on Wall Street where investors had been hit by worries over China's faltering economy, London copper futures also strengthened on Thursday.

Data released on Wednesday showed US non-defense capital goods orders excluding aircraft, which is a proxy for business investment, increased 2.2 percent in July, the biggest rise since June last year and handily beating expectations.

"This suggests that business investment has continued to pick up at the beginning of the third quarter following a solid finish to the second quarter," ANZ said in a morning note on Thursday, referring to the US core capital goods order data.