By Barani Krishnan

Investing.com – Oil prices rose for a third straight day on Wednesday as data from the U.S. government on Wednesday showed supportive drawdowns in crude and gasoline stockpiles toward the end of summer. 

But the rally of nearly 10% on the week, which overwrote all of last week’s 9% slump, appeared to be reaching exhaustion with prices edging toward the $70 resistance, said analysts.

New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up 82 cents, or 1.2%, at $68.36 per barrel. Week-to-date, WTI has risen 9.7% — recovering all of last week’s 8.9% plunge, which was its sharpest loss since October 2020.

London-traded , the global benchmark for oil, settled up $1.20, or 1.7%, at $72.25. For the week, Brent rose 10.8%, after last week’s 7.7% drop.

Still, after three days of strong gains, the market was looking toppy, said Craig Erlam, analyst at OANDA.

“Oil prices have seen their resurgence grind … following a remarkable start to the week,” said Craig Erlam, analyst at OANDA.

Crude prices tumbled last week on fears that a Covid resurgence from the Delta variant could bring a new round of demand destruction. 

But latest pandemic statistics out of China, however, suggested that new lockdowns might not be necessary. U.S. Covid concerns also eased this week, although the Delta variant remains a source of major concern in the world’s largest oil consuming country.

Wednesday’s run-up in oil was helped by data from the Energy Information Administration that showed higher-than-expected U.S. crude and gasoline draws for a second week in a row, suggesting a late summer season spike in energy demand. 

U.S. fell by 2.98 million barrels in the week to August 20, the US Energy (NASDAQ:) Information Administration said in its Weekly Petroleum Status Report. Analysts polled by US media had expected a drawdown of 2.0 million barrels instead. In the previous week to August 13, crude stockpiles fell by 3.23 million barrels versus a forecast drop of 1.06 million. 

also fell more than expected last week, drawing down 2.24 million barrels against an expected decline of 1.5 million, the EIA data showed.

bucked the trend, rising by 645,000 barrels versus an expected slide of 900,000.

U.S. oil demand was overwhelmingly strong in the first two months of summer, with almost 50 million barrels of crude being drawn down at one point over nine straight weeks by refiners to produce gasoline — the main motor fuel during the peak of the driving season.

Since then, a resurgence of Covid infections via the Delta variant have put a damper somewhat on oil demand, causing spotty demand trends.