U.S. crude oil inventories last week dropped the most in 10 months, falling more than expected as imports declined and refining rates rose, while gasoline stocks decreased although demand remained lackluster, the Energy Information Administration (EIA) said July 12.

Crude inventories fell 7.6 million barrels (bbl) in the week to July 7, compared with analysts' expectations for a decrease of 2.9 million bbl. The decline was the biggest since the week ended Sept. 4.

The largest crude draw was in the Gulf Coast region, where crude stockpiles fell 6.1 million bbl, the biggest weekly draw since May.

Crude stocks at the Cushing, Okla., delivery hub for U.S. crude futures fell by 1.9 million bbl to 57.6 million bbl, their lowest level since November 2015, the EIA said.

U.S. inventories have been closely watched amid market concerns that U.S. output from shale formations could offset OPEC's efforts to throttle back production and curb a global supply glut.

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U.S. West Texas Intermediate (WTI) crude briefly rallied to a session high of $46.48/bbl after the data was released before paring gains.

WTI crude was trading up 22 cents at $45.26 by 10:04 a.m. CST (16:04 GMT). Global benchmark Brent crude traded up 5 cents a bbl at $47.57.

The report was initially bullish because of the large crude stockpile drawdown, however, analysts cautioned that the levels fell short of expectations set by trade group data from the American Petroleum Institute released on July 11 that showed a hefty 8.1 million bbl draw.

Also, at 495.4 million bbl, U.S. crude oil inventories were in the upper half of the average range for this time of year.

"The country’s gasoline demand remains lackluster and gasoline stocks are still above the five-year average, which will cap gains in crude and gasoline prices," said Abishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

Gasoline stocks fell 1.6 million bbl, compared with analysts' expectations in a Reuters poll for a 1.1 million bbl gain, but were in the upper half of the average range, the EIA said.

U.S. gasoline demand over past four weeks was also 0.3% lower from a year ago.

Refinery crude runs rose by 103,000 bbl/d to 17.2 million bbl/d, nearing record high rates of 17.5 million bbl/d reached at the end of May, as utilization rates rose 0.9 percentage point to 94.5% of total capacity, EIA data showed.

U.S. crude imports fell last week by 282,000 bbl/d, while exports rose to 918,000 bbl/d from 768,000 bbl/d.

Distillate stockpiles, which include diesel and heating oil, rose 3.1 million bbl, vs. expectations for a 1.1 million bbl increase, the EIA data showed.