Crude inventories fell 8.5 million barrels in the week ended July 26, far exceeding analysts' expectations for a decrease of 2.6 million barrels. At 436.5 million barrels, crude inventories, not including strategic oil reserves, were at the five year average for this time of year, the EIA said.

The drawdown came even as offshore production restarted as the effects of Hurricane Barry waned, with output rebounding to 12.2 million barrels per day, near recent levels, from 11.3 million bpd a week earlier.

Net US crude imports also rose last week by 353,000 bpd.

Crude stocks at the Cushing, Oklahoma, delivery hub for US crude futures fell by 1.5 million barrels, EIA said.

Prices rose after the EIA report with US crude futures  touching a two-week high at $58.82 a barrel. By 10:52 a.m. EDT (1438 GMT), US crude was up 1%, or 53 cents, at $58.59 a barrel, while Brent crude rose 49 cents to $65.21 a barrel.

"The strong demand is underpinning prices, along with the steep and rapid decline in crude oil inventories over the past several weeks," said John Kilduff, partner at Again Capital Management in New York.

Refinery crude runs fell by 43,000 bpd and refinery utilization rates fell by 0.1 percentage point to 93% of total capacity, the EIA data showed.

Gasoline stocks fell by 1.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.4 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 894,000 barrels, versus expectations for a 1 million-barrel increase, the EIA data showed.