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Crude supported on draw in EIA crude, product stocks; weaker dollar

0255 GMT Crude oil futures were slightly higher during mid-morning trade in Asia July 29, supported by the Energy Information Administration's report of draws in US crude and product inventories, and by the depreciation of the US dollar following the conclusion of the Federal Open Market Committee's meeting.

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At 10:55 am Singapore time (0255 GMT), the September ICE Brent futures contract was up 33 cents/b (0.44%) from the previous close at $75.07/b, while the NYMEX September light sweet crude contract was 34 cents/b (0.47%) higher at $72.73/b.

Data released from the EIA late July 28 showed US crude inventories falling 4.09 million barrels to 435.6 million barrels in the week ended July 23. The drawdown pushed inventories 7.1% behind the five-year average, leaving them at their lowest level since the week ended Jan. 31, 2020.

The headline crude draw, while supportive of sentiment, however, failed to spark a significant rally, as the market was already expecting a decline in inventories after the American Petroleum Institute, a day earlier, reported that crude inventories had fallen 4.73 million barrels in the same period.

The crude draw was also not underpinned by a significant improvement in fundamentals, with refinery input falling 130,000 b/d to 15.88 million b/d, the lowest since May. The draw was partly attributable to a slowdown in crude imports, which slid 590,000 b/d to 6.51 million b/d.

Downstream product inventories also recorded declines, with US gasoline falling 2.25 million barrels to 234.16 million barrels, and US distillate inventories falling 3.09 million barrels to 137.91 million barrels in the week ended July 23.

Total products supplied, EIA's proxy for demand, defied a surge in COVID-19 infections in the US to rise 2.63% week on week to 21.23 million b/d.

"Despite all the delta variant concerns, it seems that the hit to crude demand is minimal thus far," Edward Moya, senior market analyst at OANDA, said.

"Oil prices seem like they still have a one-way ticket higher, needing to wait out the current delta variant jitters for another couple of weeks," he added.

Oil prices were also supported by the depreciation of the US dollar, with the ICE dollar index trading at 92.19 at 10.51 am am Singapore time, 0.27% lower from the July 27 close.

The depreciation in the US dollar came after the Federal Reserve reiterated its dovish stance following the FOMC meeting, emphasizing that the central bank has still not set a timeline to taper its asset purchase program.

"Our approach here has been to be as transparent as we can. We have not reached substantial further progress yet," Federal Reserve Chair, Jerome Powell said. "We see ourselves having some ground to cover to get there."