Oil up $2, extending rally after neutral EIA crude build report

By Barani Krishnan

NEW YORK (Reuters) - Oil was $2 a barrel higher on Wednesday after the U.S. government reported a crude inventory build squarely within market expectations, extending gains after an earlier rally triggered by what the market described as a big algorithmic trade.

The U.S. Energy Information Administration (EIA) said crude stockpiles rose 3.4 million barrels last week, matching analysts' expectations in a Reuters poll.

The EIA also reported an inventory drop of 785,000 barrels at the Cushing, Oklahoma, delivery hub for U.S. crude futures. .

Stockpiles of gasoline and distillates, which include diesel, meanwhile, fell more than expected.

"The market was looking for more bearish information and got a neutral report," said Scott Shelton, oil broker and commodities specialist with ICAP in Durham, North Carolina.

Global benchmark Brent was up $2.25 at $49.05 a barrel by 11:06 a.m. EDT (1506 GMT), after hitting a session high at $49.23.

U.S. crude rose $2.50 to $45.70 a barrel.

Prices had jumped more than $1 before the EIA data on a deal by a big algorithmic trader, the market said.

(Additional reporting by Amanda Cooper in London and Aaron Sheldrick in Tokyo; editing by Jason Neely and Marguerita Choy)