By Barani Krishnan
NEW YORK (Reuters) - Crude futures rallied by more than 1 percent on Tuesday, latching onto a rebound in oil products ahead of U.S. inventory data expected to show strong demand for gasoline.
Also supporting prices were signs of trouble with an impending Iranian nuclear deal that could delay Tehran's hopes of lifting Western sanctions on its oil exports.
A strong dollar, which usually pressures commodities such as oil, and worries about stubbornly high U.S. oil production did little to temper the rally.
Brent crude futures were up $1 or 1.6 percent, at $64.34 a barrel by 11:57 a.m. EDT (1557 GMT).
U.S. crude futures rose 70 cents, or 1.2 percent, to $61.08.
Oil products gained even more, leading the charge higher.
Gasoline futures surged 1.6 percent, holding above the 50-day moving average. They briefly fell below that moving average on Monday for the first time since February.
Ultra-low sulfur diesel jumped almost 2 percent.
"All of the action remains in products," said Scott Shelton, a crude broker with ICAP in Durham, North Carolina.
The oil products markets have been extraordinarily strong since the start of the peak U.S. driving season at the end of May, which typically translates to higher demand for fuels.
U.S. gasoline inventories were seen to have fallen 400,000 barrels last week, while refinery utilization rates were seen to have risen 0.7 percentage point from 93.1 percent, a Reuters poll showed ahead of official inventory data due on Wednesday.
U.S. commercial crude oil stocks were also expected to have fallen for an eighth straight week, the poll indicated.
Aside from the poll, industry estimates on last week's supply-demand in oil is due from the American Petroleum Institute later on Tuesday at 4:30 p.m. EDT (2030 GMT)
In Iran, the parliament passed a bill banning access for U.N. inspectors to its military sites and scientists.
A crude broker in New York said the bill was "an indication that Iran may be running into some difficulties" in meeting a self-imposed June 30 deadline on a nuclear accord with world powers to resume crude exports.
Two major stumbling blocks to a deal have been disputes over how much transparency Iran should offer to ease suspicions that it has covertly sought to develop nuclear bombs, and the timing and pace of relief from sanctions imposed on Tehran.
(Additional reporting by Simon Falush in London and Keith Wallis in Singapore; Editing by Marguerita Choy and Chris Reese)
