Oil prices rose Thursday as a bumper draw in U.S. oil inventories turned attention onto fundamentals given signs that the Israel-Iran ceasefire was holding. 

At 08:15 ET (12:15 GMT), Brent oil futures rose 0.7% to $66.89 a barrel, while West Texas Intermediate crude futures rose 0.7% to $65.39 a barrel.

Both benchmarks climbed nearly 1% on Wednesday, recovering from losses earlier in the week after data showed resilient U.S. demand.

U.S. inventories log outsized draw for second week

Government data, released on Wednesday, showed that U.S. oil inventories shrank 5.8 million barrels in the week to June 20, much more than expectations for a 1.2 million barrel draw.

The print follows another hefty 11.5 million barrel draw from the week prior, and also showed sharp draws in distillates and gasoline inventories.

Wednesday's data indicated that demand in the world's biggest fuel consumer remained strong, and was picking up with the onset of the travel-heavy summer season.

The reading helped quash some concerns that U.S. fuel demand was cooling amid weaker consumer spending and heightened uncertainty over President Donald Trump's trade tariffs, although these factors are expected to remain in play in the coming months.

Oil nurses steep losses as Israel-Iran truce holds

Still, crude prices are still sharply over the course of this week--the global benchmark Brent is still 13% lower this week--as an Israel-Iran ceasefire removed concerns over near-term disruptions in Middle Eastern oil supplies.

"A U.S.-brokered ceasefire between Iran and Israel sent oil prices tumbling this week, as traders and investors bet the bombing campaigns are over, and that the crucial Strait of Hormuz, through which 21 million barrels of oil pass each day, will remain undisturbed," said analysts at ING, in a note.

Trump did not announce any more sanctions on Iran's oil industry over the country's recent conflict with Israel, keeping Middle Eastern oil supplies relatively high. The U.S. president also hinted at a potential easing in sanctions to help the Islamic state rebuild, with nuclear talks with Washington scheduled for next week.

Ambar Warrick contributed to this article

Oil prices also benefited from sustained weakness in the dollar. The greenback clocked fresh losses on a report that President Donald Trump planned to announce the successor to Federal Reserve Chair Jerome Powell much earlier than expected, in a likely bid to undermine Powell and to spur expectations for interest rate cuts.

Oil was nursing steep losses this week after Trump announced the ceasefire on Monday evening. The truce now appeared to be holding after taking effect on early-Tuesday, and diminished the prospect of supply disruptions in the Middle East.

Source: Investing.com