(Adds crude prices and analyst comment, paragraphs 5-8)
Investing.com -- Stockpiles of U.S. crude oil unexpectedly rose last week, snapping eight previous weeks of drawdowns, the Energy Information Administration said on Wednesday.
Crude inventories showed a build of 2.108 million barrels last week, compared with analysts' expectations for a draw of 4.466 million barrels.
Distillate stockpiles, which include diesel and heating oil, showed a draw of 1.349 million barrels in the week against expectations for a build of 557,000 barrels, the EIA data showed.
Gasoline inventories fell 121,000 barrels last week the EIA said, compared with expectations for a draw of 1.043 million barrels.
The higher U.S. crude numbers came after eight straight weeks of drawdowns that removed more than 40 million barrels from stockpiles, sending oil priced to four-year highs.
New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, tumbled 7.5% to under $67 a barrel at the start of this week for its worst sell-off in 16 months on worries about an output hike announced by producer group OPEC+ and reports of resurfacing cases of Covid-19. However, in Wednesday's session, WTI was up almost 4% at just under $70 a barrel in what appeared to be a counter-risk trade, despite the data released by the EIA.
“Well we have it now, the first U.S. crude build in nine weeks,” Investing.com analyst Barani Krishnan said. “Yet, oil prices are going the other way, probably because they have given up so much already in recent days.”
“At some point though, more builds reported by the EIA will matter, especially if the Delta variant starts inhibiting gasoline refining. For now, the variant can be shrugged off as a hype amid the still-busy reopening fervor in New York and other cities. But once authorities start reacting more seriously to the threat, i.e. reintroducing masking and social curbs, or companies start telling people to work from home again, that can’t be too good for oil market sentiment.”
COVID cases involving the Delta variant 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.