LONDON, July 18 Reuters Oil prices extended gains on Thursday, buoyed by a bigger than expected decline in crude stocks in the United States, the world39;s largest oil consumer.

Brent futures rose 41 cents, or 0.5, to 85.49 a barrel by 0819 GMT and U.S. West Texas Intermediate WTI crude was up 69 cents, or 0.8, at 83.54, with both having registered gains in the previous session.

U.S. crude inventories fell by 4.9 million barrels last week, data from the U.S. Energy Information Administration showed on Wednesday. That exceeds a decline of 30,000 barrels forecast by analysts in a Reuters poll and a drop of 4.4 million barrels in an American Petroleum Institute report.

Healthy demand signals from the U.S. outweigh concerns from modest Chinese growth last week, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Hopes of a Fed easing of interest rates, which can boost economic growth, and current summer travel in the U.S. are ensuring enough traction in oil demand from the world39;s largest economy.

The prospects of cuts to interest rates in both the U.S. and Europe over the coming months helped to support the market.

Federal Reserve officials said on Wednesday that the U.S. central bank is closer to cutting rates given inflation39;s improved trajectory and a labour market in better balance, possibly setting the stage for a reduction in September.

U.S. economic activity expanded at a slight to modest pace from late May through early July with firms…