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August Brent crude rose by 18 cents, or 0.21%, to $85.25 a
barrel by 1023 GMT.
U.S. West Texas Intermediate (WTI) futures for July, which
expire on Thursday, gained 3 cents, or 0.04%, to $81.60.
There was no WTI settlement on Wednesday because of a U.S.
public holiday, which kept trading largely subdued. The more
active August contract was up 1 cent at $80.72.
Oil prices are likely to remain supported around current levels
because of a growing geopolitical risk premium driven by
conflict in the Middle East, said ActivTrades analyst Ricardo
Evangelista.
Brent crude futures had edged higher in early trade on Thursday
as the market digested news of Israeli tanks advancing into
Gaza, raising concern over oil supplies from the region.
However, expectations of an inventories build appears to be
overshadowing fears of escalating geopolitical stress for now,
said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors are awaiting release of U.S. inventory data from the
Energy Information Administration (EIA) later on Thursday, a day
later than usual because of the Juneteenth holiday on Wednesday.
An industry report released on Tuesday showed that U.S. crude
stocks rose by 2.264 million barrels in the week ended June 14
while gasoline inventories fell, market sources said, citing
American Petroleum Institute figures.
Meanwhile, a gain in fuel prices on Wednesday is buoying
refining margins. The ICE gasoil futures premium to Brent crude
jumped to $20.63 a barrel on Wednesday, a two-month high.
Firmer fuel refining margins provide a "healthy dose of
encouragement for those who have been expecting improvements on
the demand side", said PVM analyst Tamas Varga.
Elsewhere on the demand side, investors await a Bank of England
(BoE) interest rate decision at 1100 GMT after the Norwegian
central bank kept rates steady and the Swiss National Bank cut
rates.
Higher interest rates increase the cost of borrowing, which can
slow economic activity and dampen demand for oil.
(Reporting by Robert Harvey in London, Deep Vakil in Bengaluru,
Laila Kearney in New York and Jeslyn Lerh in SingaporeEditing by
David Goodman)
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