Oil rises as war fears outweigh unexpected increase in U.S. crude inventories

Oil rose slightly in early trading on Wednesday as worries about escalating conflict in Europe and the Middle East offset concerns about demand after an unexpected increase in U.S. crude inventories.

 

 

Brent crude futures for delivery in August rose 6 cents to $85.39 a barrel by 0016 GMT. U.S. West Texas Intermediate crude for June delivery rose 10 cents to $81.67 a barrel.

 

 

Both benchmarks rose more than $1 in the previous session after a Ukrainian drone strike caused a fire at an oil terminal at a major Russian port, according to Russian officials and a Ukrainian intelligence source.

 

 

In the Middle East, meanwhile, Israeli Foreign Minister Yisrael Katz warned of an approaching "general war" with Lebanon's Hezbollah, even as the U.S. sought to avoid a broader conflict between Israel and Iran-backed Hezbollah.

 

 

An escalating war in the region raises the possibility that crude oil supplies from key producers could be disrupted.

 

 

To keep oil prices from rising further, U.S. crude inventories rose by 2.264 million barrels in the week ended June 14, according to market sources citing data from the American Petroleum Institute released on Tuesday. Analysts polled by Reuters had expected a 2.2 million barrel decline in crude stockpiles.

 

 

However, gasoline stocks fell by 1.077 million barrels and distillate stocks rose by 538,000 barrels, said the sources, who spoke on condition of anonymity.

 

 

Official U.S. inventory data from the Energy Information Administration is due at 1500 GMT.