Oil price rises slightly as war fears outweigh surprise rise in US crude inventories

By Laila Kearney

(Reuters) – Oil prices rose slightly in early trading on Wednesday as concerns about escalating conflicts in Europe and the Middle East outweighed demand worries following an unexpected rise in U.S. crude inventories.

Brent crude futures for August delivery rose 6 cents to $85.39 a barrel by 00:16 GMT. U.S. West Texas Intermediate crude for June rose 10 cents to $81.67 a barrel.

Both benchmarks had risen more than a dollar in the previous session after a Ukrainian drone attack caused a fire at an oil terminal at a major Russian port, Russian officials and a Ukrainian intelligence source said.

Meanwhile, in the Middle East, Israeli Foreign Minister Israel Katz warned of an impending “all-out war” with Lebanon’s Hezbollah, while the US sought to prevent a major conflict between Israel and Iran-backed Hezbollah.

An escalating war in the region poses the risk of disrupting crude oil supplies to key producers.

US crude oil inventories rose by 2.264 million barrels in the week to June 14, preventing a further rise in oil prices, market sources reported on Tuesday, citing figures from the American Petroleum Institute. Analysts polled by Reuters had expected crude oil inventories to fall by 2.2 million barrels.

However, gasoline stocks fell by 1.077 million barrels, while distillates rose by 538,000 barrels, said the sources, who spoke on condition of anonymity. (API/S)

Official US inventory data from the Energy Information Administration is expected at 15:00 GMT.

(Reporting by Laila Kearney in New York; Editing by Sonali Paul)