NYMEX crude rallies over $3 on big gasoline draw

*Gasoline stocks fell against forecast for a build

*Dollar strengthens as private sector jobs rise

*Traders watching Nigeria violence, Iran posture

NEW YORK, July 30 (Reuters) - U.S. crude oil futures rallied, extending
gains by nearly $4 on Wednesday afternoon, after data showed a surprise
draw in gasoline stocks last week.

Domestic supplies of gasoline dropped for the first time in five weeks,
pulling up RBOB futures by more than 10 cents and overshadowing a
smaller-than-expected decline in crude stocks in government data. [EIA/S]

Heating oil futures recovered from earlier losses and rose with the
rest of the market, even though stocks were up more than expected.

On the New York Mercantile Exchange at 1:20 p.m. EDT (1720 GMT),
September crude CLU8 was up $3.20 or 2.6 percent at $125.39 a barrel,
trading from $120.80 to $126.15.

Prices were down earlier as the dollar strengthened.

Resistance was pierced at $125. Technical support was charted at $118.
September crude fell to a 12-week low at $120.42 on Tuesday.

NYMEX crude reached a record $147.27 on July 11.

"The 3.5 million barrel draw in gasoline stocks was the big surprise
this week, a function of a 165,000 barrel per day decline in refinery
production, a 180,000 bpd drop in imports, and a 126,000 bpd increase in
demand," said Tim Evans, analyst at Citi Futures Perspective.

In London, September Brent crude LCOU8 was up $2.82 or 2.3 percent at
$125.53 a barrel, trading from $121.42 to $126.80.

Ahead of the NYMEX August refined products contracts expiration on
Thursday, August RBOB RBQ8 was up 8.98 cents or 2.99 percent at $3.0975 a
gallon, trading $2.9850 to $3.1130. RBOB hit a record $3.6310 on July 11.

Also propping RBOB was news that BP Plc (BP.L: Quote, Profile, Research) cut rates at a
gasoline-making unit at its Texas City, Texas, refinery on Tuesday due to
mechanical trouble. [ID:nN30483582]

August heating oil HOQ8 rose 3.03 cents or 0.87 percent to $3.5025 a
gallon, trading from $3.4349 to $3.5201. Heating oil reached a record
$4.1586 on July 11.

The U.S. Energy Information Administration said that for the week to
July 25, gasoline stocks fell for the first time in five weeks, by 3.5
million barrels to 213.6 million barrels.

In a Reuters poll, analysts on average had forecast a rise of 200,000
barrels.

Gasoline demand rose to 9.47 bpd from 9.34 million bpd the week before.
Production and imports fell.

Crude stocks dropped 100,000 barrels to 295.2 million barrels,
extending a decline for two consecutive weeks. Forecasters had expected a
1.6 million barrel decline.

Distillate stocks rose by a larger-than-expected 2.4 million barrels to
130.5 million barrels, up for the 12th week in a row. The forecast had been
for a 1.9 million barrel increase.

Continuing violence in Nigeria and Iran's unyielding stance on its
disputed nuclear program remained supportive for crude.

The dollar surrendered gains on Wednesday as U.S. crude oil futures
advanced further and also caused stocks on Wall Street to give up some
ground. [USD/]

Earlier, the dollar was up broadly after the independent ADP Employer
Services report showed the U.S. private sector unexpectedly added 9,000
jobs in July, raising prospects of an improvement in nonfarm payrolls data
due for release on Friday.
(Reporting by Gene Ramos and Robert Gibbons;
Editing by John Picinich)