Oil rises slightly as war concerns surpass unexpected U.S. crude build
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Oil Prices Edge Up Amid Escalating Global Conflicts and U.S. Inventory Surprises
Oil prices experienced modest gains in early trade on Wednesday, driven by concerns over increasing geopolitical tensions in Europe and the Middle East. These worries overshadowed the demand concerns spurred by an unexpected rise in U.S. crude inventories.
Brent crude futures for August delivery saw a slight increase, rising by 6 cents to $85.39 per barrel as of 0016 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for June edged up by 10 cents, reaching $81.67 per barrel.
Impact of Geopolitical Tensions
The rise follows a notable gain in the previous session, where both benchmarks increased by over a dollar. This spike was largely influenced by a Ukrainian drone attack that caused a fire at a significant oil terminal in a major Russian port, as confirmed by Russian officials and a Ukrainian intelligence source.
In the Middle East, Israeli Foreign Minister Israel Katz issued a stark warning about the potential for an "all-out war" with Lebanon's Hezbollah. Concurrently, the U.S. made efforts to prevent a broader conflict between Israel and the Iran-backed Hezbollah. Increased hostilities in these regions could potentially disrupt crude supply from key producers, contributing to the rise in oil prices.
Influence of U.S. Crude Inventory Data
Counteracting the upward pressure on oil prices, U.S. crude stocks rose unexpectedly. According to market sources citing figures from the American Petroleum Institute (API), crude inventories increased by 2.264 million barrels for the week ending June 14. This was contrary to analysts' expectations, who had predicted a drawdown of 2.2 million barrels.
While crude inventories saw an unexpected build, gasoline stocks fell by 1.077 million barrels. At the same time, distillate inventories saw an uptick of 538,000 barrels. These figures were disclosed by sources preferring to remain anonymous.
The official U.S. stocks data are set to be released by the Energy Information Administration at 1500 GMT, which could provide further market direction.
