Crude inventories rose by 7.1 million barrels to 426 million barrels in the week ended July 4, the EIA said, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel draw.

"Overall demand jumped back up, so the market is taking the build in crude supplies as kind of a one-off," said Phil Flynn, an analyst with Price Futures Group.

Gasoline stocks fell by 2.7 million barrels in the week to 229.5 million barrels, the EIA said, nearly double expectations for a 1.5 million-barrel draw. Gasoline demand rose 6% to 9.2 million bpd last week.

"If we look at gasoline demand numbers, they were back up to a respectable number," Flynn added.

Crude futures pared up some of their losses after the EIA data showing strong fuel demand.

Brent crude futures were down $0.19 cents, or 0.3%, at $69.96 a barrel by 10:47 a.m. ET (1447 GMT), while U.S. West Texas Intermediate was down $0.26 cents, or 0.4%, at $68.07 a barrel.