UPDATE 2-U.S. crude inventories soar, fuel stocks dip -EIA

(New throughout, updates prices to settlement, adds new comment)

By David Gaffen

July 7 (Reuters) - U.S. crude oil stockpiles rose sharply last week, driven by an increase in inventories and as refiners cut output, the Energy Information Administration said on Thursday.

Crude inventories rose by 8.2 million barrels in the week to July 1, compared with analysts' expectations for a draw of 1 million barrels. Much of that inventory came from another release of barrels from the U.S. Strategic Petroleum Reserve (SPR), which fell by 5.8 million barrels.

U.S. commercial stocks are at 423.8 million barrels, or about 10% below the average for this time of year, EIA said. Prices have been high for months as refiners attempt to meet consumer demand.

Refinery crude runs fell by 228,000 barrels per day. Refinery utilization rates dropped by 0.5 percentage point to 94.5%.

"We know refiners are going to have to continue to run at a high rate to keep up with demand. And so the expectation is that the crude supplies are not going to build as dramatically next week," said Phil Flynn, analyst at Price Futures Group.

Gasoline stocks fell by 2.5 million barrels to 219.1 million barrels, compared with analysts' expectations in a Reuters poll for a draw of 0.5 million barrels.

Distillate stockpiles, which include diesel and heating oil, fell 1.3 million barrels, versus expectations for a build of 1.1 million barrels.

"The inventories are supportive for the oil market as you have across-the-board inventory draws as the SPR offsets the increase in commercial inventories," said Andrew Lipow, president of Lipow Oil Associates in Houston.

Product supplied, the best proxy for U.S. consumer demand, was up in the most recent week to 20.5 million bpd, though overall gasoline and distillate demand over the past four weeks was down a bit more than 5% from the year-ago period.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 69,000 barrels.

Net U.S. crude imports rose by 1.61 million bpd last week.

Oil prices rose on the news, rebounding from recent losses. Brent ended up 3.9% to $104.65 on the day while U.S. crude gained 4.3% to $102.73 a barrel. (Reporting By David Gaffen Editing by Marguerita Choy and David Gregorio)