Crude oil market slightly settled higher on Wednesday as investors worried that a potential expansion of the Gaza war could disrupt supplies from the Middle East.
During the session, Brent crude futures expanded by 24 cents or 0.3% to finish at $85.25 per barrel and the US West Texas Intermediate ,WTI, crude futures increased by 7 cents to sell for $80.90 a barrel.
Hezbollah in Lebanon and Israel have been facing increasing cross-border tensions in recent weeks, which has fueled worries of an all-out conflict between the two groups that would include other regional countries, notably Iran, a major oil exporter.
The United Nations said on Wednesday he was concerned by the possible spread of the Gaza war across the region.
The President of Turkey, Mr Tayyip Erdogan urged help from neighbouring nations and said that his nation was in solidarity with Lebanon.
Attacks by the Houthis on Red Sea vessels have helped to keep oil prices high. The group claimed that as part of a combined military action with the Islamic Resistance in Iraq, it used several drones to strike a ship in the port of Haifa, Israel.
Early in the session, oil prices fell after the US Energy Information Administration ,EIA, reported a 3.6 million barrel jump in the country’s crude oil stocks last week.
This compared with a draw of 2.5 million barrels that pushed prices higher last week, as it was accompanied by inventory declines in gasoline and middle distillates as well, suggesting strengthening demand.
Meanwhile, the American Petroleum Institute ,API, on Tuesday estimated an oil inventory build of less than 1 million barrels for the week to June 21, which despite its size weighed on prices.
The Energy Information Administration also reported a gasoline inventory increase of 2.7 million barrels for last week, which compared with a draw of 2.3 million barrels for the previous week.
Based on these new developments, market analysts expect oil prices to rise in the coming weeks.
Meanwhile, oil traders expressed worries about weak US gasoline (petrol) consumption during the country’s peak summer driving season.
US gasoline use represents around 10% of total world oil consumption, and gasoline demand in the country last week was down 3.6% from a year ago to around 8.9 million barrels a day. The inventories rose unexpectedly even as refiners cut back output.
