Oil prices were little changed on Wednesday, staying close to their highest levels in seven weeks as the market weighed concerns over escalating conflicts against demand worries following an unexpected rise in U.S. crude inventories.
Brent crude futures for August , due to expire on Thursday, were down 13 cents to $85.20 a barrel by 1046 GMT, while the more active September contract eased by 5 cents to $84.48.
U.S. West Texas Intermediate crude was down 20 cents to $81.37 per barrel.
U.S. crude stocks rose by 2.264 million barrels in the week ended June 14, market sources said on Tuesday, citing American Petroleum Institute figures. Analysts polled by Reuters had expected a 2.2 million barrel draw in crude stocks.
However, gasoline inventories fell by 1.077 million barrels, while distillates rose by 538,000 barrels, the sources said, speaking on condition of anonymity.
Official stocks data from the U.S. Energy Information Administration is due at 11 a.m. ET.
“Higher-than-expected U.S. inventories led to a slight drop in barrel prices,” ActivTrades analyst Ricardo Evangelista wrote in a note, adding that geopolitically motivated supply side concerns have lately dominated oil markets.
“Given the ongoing tug-of-war between future supply and demand expectations, it is perhaps advisable not to read too much into this morning’s losses,” he noted.
Both benchmarks, having recovered strongly in the last two weeks, gained more than $1 in the previous session to seven-week peaks after a Ukrainian drone strike led to an oil terminal fire at a major Russian port.
In the Middle East, Israeli Foreign Minister Israel Katz warned of a possible “all out war” with Lebanon’s Hezbollah, even as the U.S. attempted to avoid a broader conflict between Israel and the Iran-backed group.
An escalating war risks supply disruption in the key oil-producing region.
“Any cooling off between both parties seems difficult in the near term, which may keep oil prices well-supported as market participants shrug off pockets of weakness on the economic front, from weaker-than-expected U.S. retail sales to mixed sets of data out of China this week,” said Yeap Jun Rong, a market strategist at IG in Singapore.
China data this week showed May industrial output lagged expectations, but retail sales, a gauge of consumption, marked their quickest growth since February.
