BusinessOil & Gas/Mining

Oil slips amid war jitters, surprise build in US crude stocks

Brent crude futures eased 17 cents to US$85.16 a barrel by 0635 GMT, while U.S. West Texas Intermediate crude was down 22 cents to US$81.35 per barrel

Oil prices eased slightly during trade on Wednesday but held near their highest levels in seven weeks, as the market weighed concerns over escalating conflicts against demand worries following an unexpected build in US crude inventories.

Brent crude futures eased 17 cents to US$85.16 a barrel by 0635 GMT, while U.S. West Texas Intermediate crude was down 22 cents to US$81.35 per barrel.

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

In the Middle East, Israeli Foreign Minister Israel Katz warned of a nearing “all out war” with Lebanon’s Hezbollah, even as the U.S. attempted to avoid a broader conflict between Israel and Iran-backed Hezbollah.

An escalating war in the region raises the prospect crude supply from key producers could be disrupted.
Oil prices had recovered quite strongly in the last two weeks, amid potential disruption risks “in the event of a wider conflict, as geopolitical tensions are brought to a new front between Israel and Hezbollah,” said Yeap Jun Rong, a market strategist at IG in Singapore.

“Any cooling off between both parties seems difficult in the near term, which may keep oil prices well-supported as market participants shrug off pockets of weakness on the economic front, from weaker-than-expected U.S. retail sales to mixed sets of data out of China this week.”

China data this week showed May industrial output lagged expectations, but retail sales, a gauge of consumption, marked their quickest growth since February.

If we have any hope of reducing the damages from climate change over the next couple of decades, methane is a key

 

Analysts in an ANZ Research report on Wednesday said a broader risk-on tone across global markets supported crude oil prices.

Mixed U.S. economic data for May has boosted bets the Federal Reserve will cut rates sooner rather than later, the analysts added, referring to strong industrial production and retail sales that barely rose.

Fed officials are looking for further confirmation that inflation is cooling and for any warning signs from a still-strong labour market as they steer cautiously toward what most expect to be an interest rate cut or two by the end of this year.

 

 

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Source
Reuters
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