UPDATE 8-U.S. crude oil higher driven by late technical rally
* U.S. Federal Reserve will continue with stimulus
* GDP growth, private sector hiring beat forecasts
* Cushing crude stocks fall for 5th week - EIA
NEW YORK, July 31 (Reuters) - U.S. crude oil futures settled nearly two percent higher as technical trading fuelled late-session gains, driving prices to their largest monthly percentage gain in nearly a year.
Positive U.S. economic data offset a U.S. Energy Information Administration report that showed crude stockpiles had risen against expectations for a draw. Other data showed U.S. economic growth accelerated unexpectedly in the second quarter and private sector hiring was higher than forecast in July.
Front-month U.S. crude oil futures settled $1.95 per barrel higher at $105.03. The futures gained about 9 percent in July, the biggest one-month percentage gain in 11 months.
The bulls "got it through yesterday's high and pushed it up," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. "They were targeting that all day and once the market turned around after the (EIA) number, it gathered momentum."
The premium of Brent crude to U.S. crude oil futures was the smallest in more than a week after data showed a drop in supplies at a key hub and hardened views that more oil is being funnelled out of the U.S. Midwest to replace coastal imports.
The front-month premium of Brent over U.S. crude oil settled at $2.67 per barrel after trading as narrow as $2.44 and as wide as $3.74 per barrel earlier in the session.
Brent's premium over U.S. crude oil futures narrowed the most in percentage terms since July 19.
U.S. government data showed oil inventories at the Cushing, Oklahoma, delivery point fell for a fifth straight week to the lowest since April 2012.
New infrastructure has helped drain supplies from the U.S. benchmark supply point. BP Plc's new 250,000 bpd crude distillation unit at its Whiting, Indiana, refinery started up at the end of June.
The U.S. Federal Reserve announced it plans to continue its $85 billion a month purchases of mortgage and Treasury securities to back the economy. The market had been waiting for the announcement to see whether the Fed would ease up on the stimulus program, the loss of which is expected to decrease oil demand and hurt prices, analysts said.
BRENT OIL MARGINALLY HIGHER
Front-month Brent crude oil futures settled the day 79 cents higher at $107.70 per barrel in choppy trading and remained near flat for most of the day.
Brent crude futures ended July with their largest monthly percentage gain since August 2012, boosted by gains earlier in the month as political tensions in the Middle East kept alive concerns about oil supplies from the region, which pumps a third of the world's oil.
Also supporting Brent prices was the fact that Libya's oil exports have slumped by 70 percent as some ports shut down because of protests.
Oil outages in Iraq, South Sudan, Libya and Iran have combined to help keep Brent crude oil prices well above $100 a barrel this month, partly countering the rise in U.S. shale oil supply and worries about Chinese demand.
Gains were somewhat muted after Sudan said it might not block crude exports from South Sudan after "good steps" were taken to end a row over alleged rebel support.
Crude oil pumping resumed through the Kirkuk-Ceyhan pipeline on Tuesday night after repairs were completed following a bomb attack over the weekend.
Investors were also awaiting manufacturing data later this week from China, which could show weakness in the world's No. 2 oil consumer.