Brent crude futures eased 34 cents to $84.99 a barrel by 0832
GMT, while U.S. West Texas Intermediate crude was down 43 cents
to $81.14 per barrel.
U.S. crude stocks rose by 2.264 million barrels in the week
ended June 14, according to market sources, citing American
Petroleum Institute figures on Tuesday. Analysts polled by
Reuters had expected a 2.2 million barrel draw in crude stocks.
Gasoline inventories, however, fell by 1.077 million barrels,
while distillates rose by 538,000 barrels, the sources said,
speaking on condition of anonymity. [API/S]
Official U.S. stocks data from the Energy Information
Administration is due at 1500 GMT.
Both benchmarks gained more than $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 possible "all out war" with Lebanon's Hezbollah, even as
the U.S. attempted to avoid a broader conflict between Israel
and the Iran-backed group.
An escalating war risks supply disruption in the key
oil-producing region.
Oil prices had recovered strongly in the last two weeks as the
market weighed those concerns "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.
(Additional reporting by Laila Kearney in New York and Emily
Chow in Singapore; Editing by Sonali Paul, Miral Fahmy, Jamie
Freed and Sharon Singleton)
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