Oil rebounds as U.S. crude stocks fall

By Felicia Loo

SINGAPORE (Reuters) - Oil rebounded 0.7 percent on Thursday, stemming losses of around 4 percent in the last two days, as falling U.S. crude stocks added to supply worries in a market already on tenterhooks following missile tests by Iran.

U.S. crude for August delivery gained 57 cents to $136.62 a barrel, after gaining a penny on Wednesday's close. But oil, which has gained over 40 percent so far this year, was way off the record $145.85 a barrel hit on July 3. London Brent crude rose 72 cents to $137.30 a barrel.

A fall in U.S. crude stocks by 5.9 million barrels last week, more than triple what analysts projected, highlighted supply concerns.

"The key driver is the oil stock draw in the United States after a few days of a strong decline in prices," said Gerard Burg of the National Australia Bank in Melbourne.

Inventories fell to 293.9 million barrels, with the draw largely along the West Coast, due to a renewed drop in imports, the Energy Information Administration said in its report for the week ended July 4.

The fall came as domestic refineries cranked up runs by 75,000 million barrels per day (bpd) to 15.49 bpd.

However, the stock fall failed to stir up prices to a big extent.

"Two months of nearly uninterrupted weekly draws have accustomed the market to the notion that such de-stocking is more bearish than bullish, reflecting as it does refiners' cost-cutting efforts in the face of record prices, falling product demand and tight credit," said Antoine Halff from Newedge USA, LLC, in a report.