By Barani Krishnan
NEW YORK (Reuters) - Oil prices rose 2 percent on Thursday as traders covered short positions a day after crude futures were hammered by data showing weak U.S. fuel demand in a busy summer driving season that heightened fears about a global oil glut.
Oil was also supported by the dollar's drop against the pound after the Bank of England's surprise decision not to cut rates. [GBP/]
A weaker dollar tends to make greenback-denominated oil more attractive to holders of other currencies. The UK central bank was widely expected to ease after Britain's vote last month to leave the European Union caused market turmoil.
Some traders said Wednesday's 4 percent slump in oil prices after a raft of bearish U.S. inventory data was excessive.
"It's always the case a day after a big rally or sell-off for people to feel it was overdone," said Phil Flynn, an analyst with Chicago brokerage Price Futures Group.
"The argument is also on what's the fair price for oil? I think $44 is a good support, as $40 or below will again deter investments."
Brent crude futures settled up $1.11, or 2.4 percent, at $47.37 a barrel. It rose to $47.47 at the session high.
U.S. crude's West Texas Intermediate (WTI) futures settled up 93 cents, or 2.1 percent, at $45.68 a barrel. The day's peak was $45.80.
U.S. crude stocks fell less than expected last week, while gasoline stocks unexpectedly increased and distillate inventories rose the most since January, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
Many had expected record driving trips and low pump prices to boost gasoline usage this summer. A glut in refined products globally is putting crude under pressure, with Middle East grades in particular hit by low Asian demand. [CRU/M]
Adding to the bearish picture, the International Energy Agency (IEA) said on Wednesday a persistent global crude glut weighed on oil despite demand growth and declines in non-OPEC production. [IEA/M]
Data on Thursday from market intelligence firm Genscape showed a 171,511-barrel build at the Cushing, Oklahoma delivery hub for WTI futures during the week to July 12, traders said.
Technically, crude may be poised for another fall, said Tamas Varga of PVM Oil Associates in London, who said Brent could break below its 100-day moving average of $44.84 as early as next week.
(Additional reporting by Christopher Johnson in LONDON and Aaron Sheldrick in TOKYO; Editing by Marguerita Choy and Diane Craft)