NEW YORK: Oil prices rose by about one percent on Wednesday, despite a surprise increase in US gasoline supplies. Investors are concerned that the ongoing conflict in Gaza could disrupt crude supplies from the Middle East.
Brent crude futures increased by 22 cents, or 0.3%, to $85.23 per barrel by 1835 GMT. US West Texas Intermediate (WTI) crude futures settled 7 cents higher at $80.90 a barrel.
Tensions between Israel and Lebanon’s Hezbollah have been escalating in recent weeks, raising fears of a broader conflict that could involve major oil producer Iran.
“The geopolitical risk premium is returning to the market. A war between Israel and Lebanon could directly involve Iran, which is concerning,” said Andrew Lipow of Houston-based Lipow Oil Associates.
Earlier in the session, oil prices fell after the US Energy Information Administration (EIA) reported a 3.6 million barrel increase in the country’s crude oil stocks last week. This was unexpected, as analysts polled by Reuters had anticipated a drawdown.
US stockpiles are rising while inventories elsewhere are declining, noted UBS analyst Giovanni Staunovo. “I would call the oil market a tale of different stories,” Staunovo said. “We saw oil inventory draws in Japan and Europe last week, so it seems the market is tightening, just not yet in the US.” UBS expects oil prices to rise in the coming weeks.
Oil traders are also concerned about weak US gasoline consumption during the country’s peak summer driving season.
For more updates on oil prices and market trends, stay tuned.
