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Oil Steady Amid U.S. Stock Build but War Jitters Abound

Oil prices remained largely steady on Wednesday, hovering near their highest levels in seven weeks. Brent crude futures eased by 34 cents to $84.99 per barrel by 0832 GMT, while U.S. West Texas Intermediate (WTI) crude was down 43 cents to $81.14 per barrel.

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Concerns over escalating conflicts and demand uncertainties persisted despite an unexpected build in U.S. crude inventories. According to sources citing American Petroleum Institute figures, U.S. crude stocks rose by 2.264 million barrels in the week ending June 14, contrary to analysts’ expectations of a 2.2 million barrel draw. Gasoline inventories saw a decrease of 1.077 million barrels, while distillates rose by 538,000 barrels.

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Official U.S. Energy Information Administration data is scheduled for release at 1500 GMT.

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The previous session saw both Brent and WTI crude prices surging over $1 following a Ukrainian drone strike that caused an oil terminal fire at a major Russian port, as reported by Russian officials and Ukrainian intelligence sources.

In the Middle East, Israeli Foreign Minister Israel Katz cautioned about a potential “all out war” with Lebanon’s Hezbollah, amid efforts by the U.S. to prevent a broader conflict between Israel and the Iran-backed group. Geopolitical tensions in this key oil-producing region pose risks of supply disruptions.

Oil prices have rebounded strongly over the past two weeks as the market weighs these geopolitical tensions. Yeap Jun Rong, a market strategist at IG in Singapore, noted that the market continues to support oil prices amidst ongoing geopolitical uncertainties. He mentioned that despite weaker-than-expected U.S. retail sales and mixed Chinese economic data, which included lagging May industrial output but strong retail sales growth, the focus remains on geopolitical risks.

The situation underscores how global geopolitical developments are influencing oil markets amid economic indicators showing varied performance in major economies like the U.S. and China.

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