The image is added as the background. However it looks like that is not being displayed as your images are being served by JetPacks image CDN. Can you disable this plugin temporarily to check.
The Header Element is using a URL from the Image CDN – it just looks like it isn’t the correct one or the necessary script it uses to load them is not working as the image is outside of the post content.
I am not sure it is possible to do that and the alternative would be to disable the Header Element assigned to the Single Posts