(New throughout, with market settlements)
By Barani Krishnan and Liz Moyer
Investing.com -- Oil prices jumped 5% on Wednesday, rising even after a surprise build in crude stockpiles that snapped eight weeks of declines, as bulls seized back control of a market that plunged earlier in the week.
Crude inventories rose by 2.108 million barrels during the week ended July 16, the Energy Information Administration said, wrong-footing analysts who had expected a draw of 4.466 million barrels.
It was the first weekly build since draws that began in late May, which removed more than 40 million barrels from stockpiles. The drawdowns helped send U.S. oil prices to four-year highs of almost $78 a barrel as market punters bet on record fuel consumption in an economy reopening from Covid lockdowns.
Gasoline inventories also fell less than expected last week, drawing just 121,000 barrels, according to the EIA, versus expectations for a drop of 1.043 million barrels.
Distillate stockpiles, which include diesel and heating oil, were the only numbers on the positive side for last week. These declined by 1.349 million barrels against forecasts for a build of 557,000 barrels.
New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up $3.10, or 4.6%, at $70.30 a barrel.
WTI tumbled 7.5% to reach under $67 a barrel on Monday for its worst sell-off in 16 months as producer group OPEC+ announced an output hike and reports of resurfacing cases of Covid-19.
London-traded Brent, the global benchmark for oil, settled up $2.88, or 4.2%, at $72.23 in the latest session. Brent lost 6.8% on Monday.
“It looks like it's payback time for the bulls as the overall rebound in risk appetite on Wall Street has put some wind behind the oil market," said John Kilduff, founding partner at New York energy hedge fund Again Capital. "But the seasonal peak in gasoline consumption is over and if the EIA continues reporting builds like this for the next few weeks amid the new Covid scare, then I doubt prices would continue trending higher."
COVID case rates have been rising in the United States, where 47 of the 50 states have reported more infections than the previous week from the highly-transmissible Delta variant.
Global cases involving the Delta variant have also surged in recent weeks, prompting some countries, including Australia and South Korea, to reintroduce restrictive measures. The United Kingdom on Saturday reported the highest number of daily Covid-19 cases since Jan 2021.