Oil climbs on weaker dollar, WTI stabilizes below $40

Oil prices moved higher on Thursday as traders cheered an unexpected drop in US crude inventories, while a weaker greenback boosted prices as well. WTI futures rose 2.07% to $39.40 per barrel, while futures for Brent were traded with a 2.25% gain at $44.11 per barrel.

Crude inventories in the US fell by 5.45 million barrels in the week to August 21, the biggest one-week decline since early June, according to the fresh report from the Energy Information Administration. Analysts had forecast a rise of about 2 million barrels.

However, gasoline inventories increased by 1.66 million barrels over the measured week, with analysts betting on a 1 million barrel fall, while distillate stockpiles rose more than expected.

Moreover, the report also showed that US crude production fell by just 11,000 barrels per day, keeping output above 9.3 million barrels per day.

As for China, one of the world's top oil consumers, investors are digesting the recent policy action from the nation's central bank. On Wednesday the People's Bank of China (PBoC) said it will inject 140 billion Yuan into the financial system through a short-term liquidity adjustment operation.

It came just a day after the PBoC cut the Reserve Requirement Ratio by 50 basis points, and slashed both the deposit and lending rates by 25 basis points in response to the latest huge market sell-off.