Oil prices fell on Wednesday after reaching seven-week highs, balanced by summer demand optimism, concerns about escalating conflicts in Europe and the Middle East, and data suggesting that U.S. crude inventories have risen unexpectedly.
Brent crude futures fell 6 cents, or 0.1%, to $85.27 a barrel by 1943 GMT, while WTI crude fell 10 cents, or 0.1%, to $81.47 a barrel.
Brent reached $85.84 a barrel, its highest since May 1, earlier in the session, while WTI rose to $81.96 a barrel, its highest since April 30.
Trading stayed weak because of a U.S. federal holiday. The current snapshot paints a poor picture, but there are also signs of a more optimistic outlook.
Brent is $8 above early June lows, suggesting optimism that the global oil balance will eventually tighten.
Both indices have rebounded strongly in the past two weeks, having gained more than $1 in the previous session after a Ukrainian drone strike sparked a fire at an oil terminal at a major Russian port.
In the Middle East, Israeli Foreign Minister Israel Katz warned of a possible all-out war with Lebanon’s Hezbollah. An escalating war risks disrupting supply in the oil-producing region. Potential tensions in the Middle East add supply risks to the oil demand equation, and recent U.S. economic data supports expectations that the Federal Reserve will move to cut interest rates in the coming months.
Chinese data this week showed that industrial production in May fell short of expectations, but retail sales, a measure of consumption, grew at their fastest pace since February.
U.S. crude oil inventories rose by 2.264 million barrels in the week ending June 14, while gasoline inventories fell, according to API data. Contrary to that Analysts had expected a 2.2 million barrel drop in crude oil inventories.
However, gasoline inventories fell by 1.077 million barrels, while distillates rose by 538,000 barrels, the sources said on condition of anonymity.
The U.S. Energy Information Administration’s official oil inventories data will be released on Thursday.
