SINGAPORE: Oil prices remained flat in trade on Wednesday, as markets weighed on demand concerns following a surprise build-up in US crude inventories and a wave of tensions in Europe and the Middle East.
Brent crude futures were up 2 cents at $85.35 a barrel by 0350 GMT, while US West Texas Intermediate crude was down 6 cents at $81.51 a barrel.
Both indices had gained more than $1 in the previous session, according to Russian officials and Ukrainian intelligence sources.
In the Middle East, Israeli Foreign Minister Israel Katz has warned that “all-out war” with Lebanon’s Hezbollah is imminent, even as the United States tries to prevent a wider conflict between Israel and Iran-backed Hezbollah.
The escalating war in the region indicates a possible cut in the supply of raw materials from major producers.
“Market participants have returned to price in the risk of potential disruption as geopolitical tensions between Israel and Hezbollah are brought to the fore in the event of a wider conflict,” said Jun Rong, chief market strategist at IG in Singapore.
“Any cooling-off between the two sides seems unlikely in the near term, which could also support oil prices as market participants brace for pockets of weakness on the economic front, from weaker-than-expected US retail sales data to China this week “
Chinese data this week showed that industrial production fell ahead of expectations in May, but retail sales, a measure of consumption, showed the fastest growth since February.
Analysts said in an ANZ research report on Wednesday that a more risk-on tone in global markets is supporting crude oil prices, with US economic data for May suggesting that the Federal Reserve will cut rates soon, citing strong industrial production. retail sales increased sharply.
Federal Reserve officials are looking for warning signs of refreshing inflation and a strong labor market as they cautiously anticipate cutting rates or halving them later this year.
Lower interest rates can reduce borrowing costs, spur economic activity and increase oil consumption.
US crude stocks rose to 2.264 million barrels in the week ended June 14, preventing further oil price rises. Analysts polled by Reuters had expected crude to fall to 2.2 million barrels.
Gasoline stocks rose to 1.077 million barrels and distillates to 538,000 barrels, sources said.
The US Energy Information Administration’s official stock is due at 1500 GMT.
Oil steady amid war jitters, surprise build in US crude stocks
