Oil prices were broadly stable on Wednesday, nearing a seven-week high, as the market weighed on demand concerns and fears of escalating conflict following an unexpected rise in U.S. crude oil inventories.Brent crude futures fell 34 cents to $84.99 a barrel by 8:32 a.m. Japan time, while U.S. West Texas Intermediate crude oil fell 43 cents to $81.14 a barrel. U.S. crude oil inventories rose by 2.264 million barrels in the week to June 14, market participants said, citing American Petroleum Institute statistics on Tuesday. Analysts polled by Reuters had forecast a 2.2 million barrel decline in crude oil inventories.
But gasoline inventories fell by 1.077 million barrels and distillates rose by 538,000 barrels, the people said, asking not to be identified. [API/S] Official US stock data from the Energy Information Administration is due to be released at 15:00 JST. Both benchmarks rose by more than $1 in pre-market trading after a Ukrainian drone attack sparked a fire at an oil terminal at Russia’s main port, according to Russian officials and Ukrainian intelligence sources.
In the Middle East, Israeli Foreign Minister Israel Katz warned of the possibility of an “all-out war” with Lebanon’s Hezbollah as the US tries to avoid a broader conflict between Israel and Iran-backed groups. The escalating war poses the risk of supply disruptions in the most important oil-producing region.
Oil prices have surged in the past two weeks as markets factor in such concerns, “as geopolitical tensions between Israel and Hezbollah have been brought to a new level in the event of a major conflict,” said Yep Jun Long, market strategist at IG. Singapore. “A slowdown between the two countries could be a challenge in the near term as market participants ignore weaker-than-expected U.S. retail sales and mixed data from China this week, keeping oil prices at healthy levels.” Chinese data released this week showed industrial production in May fell short of expectations, but retail sales, a proxy for consumption, posted the fastest growth since February.
