UPDATE 1-U.S. crude stocks up, output at highest level since April 2020

(Adds details, quotes, oil prices)

By David Gaffen

Aug 10 (Reuters) - U.S. crude stocks rose in the most recent week while U.S. production hit its highest level since April 2020, a signal that high prices are driving further output in the world's largest oil producer.

Gasoline stocks fell sharply and demand rebounded modestly, though the last four weeks of gasoline consumption has been softer than in 2021, the Energy Information Administration said on Wednesday.

Crude inventories rose by 5.5 million barrels in the week to August 5 to 432 million barrels, compared with expectations in a Reuters poll for a 73,000-barrel rise.

The increase was driven by a 5.3 million barrel release from U.S. strategic reserves; the United States has been emptying its reserve to quell the rise in oil prices that began in the spring.

Production rose to 12.2 million barrels a day, highest since the outset of the coronavirus pandemic in the United States, and a signal that drillers are seeing value in boosting output in the face of higher costs. Weekly figures are volatile, however.

Refinery crude runs rose by 728,000 barrels per day in the last week, EIA said, boosting refinery utilization rates rose by 3.3 percentage points to 94.3%.

U.S. gasoline stocks fell by 5 million barrels in the week, compared with analysts' expectations in a Reuters poll for a 633,000-barrel drop.​ Notably, gasoline product supplied rose in the most recent week, but at an average of 8.9 million bpd in the last four weeks, that's 6% lower than the same time period a year ago.

"As we look at the last eight weeks worth of data there has been a significant year-on-year decline in gasoline demand," said Andrew Lipow, president of Lipow & Associates in Houston.

Distillate stockpiles, which include diesel and heating oil, rose by 2.2 million barrels.

The increase in output and slide in demand has lowered sky-high oil prices in recent weeks. U.S. crude fell by 2.2% to $88.34 a barrel as of 10:44 a.m. EST (1544 GMT) while Brent dropped 2.3% to $94.09 a barrel. (Reporting By David Gaffen; Editing by David Gregorio)