UPDATE 8-Oil rises as U.S. crude stocks fall again, Fed cuts interest rates

* Brent ends July 2.1% lower, WTI inches up 0.2% in the
month
* U.S. crude stocks drop 8.5 mln bbls in seventh weekly
fall-EIA
Fed lowers interest rates as expected
* Libya's Sharara oilfield shut, NOC declares force majeure
* U.S.-China trade talks in Shanghai; expectations low

(Updates with settlement prices, adds market activity,
commentary)
By Stephanie Kelly
NEW YORK, July 31 (Reuters) - Oil prices rose for a fifth
day on Wednesday following a larger-than-expected drop in U.S.
inventories and after the Federal Reserve cut U.S. interest
rates for the first time in more than a decade.
The front-month Brent crude LCOc1 futures contract, which
expired Wednesday, rose 45 cents to settle at $65.17 a barrel.
Brent posted a monthly decline of 2.1%.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
gained 53 cents to settle at $58.58 a barrel, and inched up 0.2%
in July.
U.S. crude stockpiles USOILC=ECI fell for a seventh
straight week, slumping 8.5 million barrels last week, the
Energy Information Administration said, far exceeding analysts'
expectations for a decrease of 2.6 million barrels.
At 436.5 million barrels, U.S. crude inventories, not
including strategic oil reserves, were at the five year average
for this time of year, the EIA said. The drawdown came even as offshore production restarted as
the effects of Hurricane Barry waned, with output rebounding to
12.2 million barrels per day, near recent levels, from 11.3
million bpd a week earlier.
Gasoline stocks USOILG=ECI fell 1.8 million barrels, while
distillate stockpiles USOILD=ECI dipped by 894,000 barrels.
"These are bullish numbers across the board. The renewed
large draw in crude oil is remarkable as U.S. oil production
bounced back significantly after (Hurricane Barry)," said
Carsten Fritsch, oil analyst at Commerzbank.
In a separate report, the EIA said U.S. crude oil output in
May slipped from a monthly record high, falling 26,000 bpd to
12.11 million bpd. After its two-day policy meeting, the U.S. Fed cut interest
rates, citing concerns about the global economy and muted U.S.
inflation. The central bank signaled a readiness to lower
borrowing costs further if needed. The Fed said the rate cut should help return inflation to
its 2% target but that uncertainties about that outlook remain.
Libya's Sharara oilfield, the country's largest, shut after
a problem on Tuesday with a valve on the pipeline linking it to
the Zawiya oil terminal. State-owned National Oil
Corp (NOC) declared force majeure on loadings of the crude grade
on Wednesday.
OPEC oil output hit an eight-year low in July as a further
voluntary cut by top exporter Saudi Arabia deepened losses
caused by U.S. sanctions on Iran and outages elsewhere in the
group, a Reuters survey found. Backwardation in Brent LCOc1-LCOc2 , a market structure in
which later-dated contracts trade at lower levels than near-term
contracts, has to a large extent evaporated, signaling a
well-supplied market despite OPEC-led output cuts and U.S.
sanctions on oil producers Iran and Venezuela.
Meanwhile, U.S. and Chinese negotiators wrapped up a round
of trade talks on Wednesday without visible signs of progress
and put off their next meeting until September. A Reuters monthly poll showed oil prices are expected to be
range-bound near current levels this year as slowing economic
growth and a protracted trade dispute curb demand. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
TECHNICALS-U.S. oil may hover around $58.48 L4N24W10O
TECHNICALS-Brent oil may test resistance at $65.39
L4N24W0F7
U.S. crude inventories, weekly changes since 2017 https://tmsnrt.rs/2y7mC9g
Backwardation evaporated https://tmsnrt.rs/2MrG6xF
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>