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Oil prices extend recovery

London - Oil prices rebounded further on Thursday as a drop in US stockpiles eased concerns of oversupply, analysts said.

US benchmark West Texas Intermediate (WTI) for delivery in September climbed 33 cents to $49.12 a barrel compared with Wednesday's close.

Brent North Sea crude for September gained 65c to stand at $54.03 a barrel in London afternoon trade.

Both contracts had already rebounded from recent losses to close higher on Wednesday after the US Energy Information Administration said American crude stockpiles last week fell 4.2 million barrels, far more than expected.

"WTI and Brent reversed losses... amid bullish supply data released by the EIA," said Sanjeev Gupta, who heads the Asia oil and gas practice at professional services organisation EY.

The EIA also said US oil production fell during the week, giving some relief to the global crude oversupply that has depressed prices.

Dealers are also keeping tabs on the Federal Reserve's plans for raising interest rates after it held fire Wednesday at its latest policy meeting but indicated the US economy is improving.

The dollar has risen as expectations grow that the central bank will announce a liftoff as early as September.

"The market will closely monitor the Fed's move as the rate hike will impact commodity prices heavily. Most analysts expect the first interest rate hike to happen in September or December this year," Gupta said.

As oil is traded in dollars a strong US unit makes it more expensive for holders of weaker currencies, hurting demand and dampening prices.

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