By Georgina McCartney
HOUSTON (Reuters) -Oil futures edged higher on Thursday on concerns about disruptions to global crude supplies as geopolitical pressures mounted in the Middle East and Europe, while a surprise surge in gasoline inventories put a ceiling on prices.
futures rose $1.14, or 1.34%, to $86.39 a barrel. U.S. West Texas Intermediate crude futures rose 84 cents, or 1.04%, to $81.74.
WTI futures also rose by more than $1 per barrel earlier in the session.
Cross-border tensions between Israel and Lebanese Hezbollah have escalated, fueling fears that a spreading war could draw in other countries, including major oil producer Iran.
The French Foreign Ministry said France is extremely concerned about the situation in Lebanon and called for restraint.
Any contamination could have a major impact on the supply of crude oil from the Middle East, said Panmure Gordon analyst Ashley Kelty.
Turkish President Tayyip Erdogan said his country stood in solidarity with Lebanon and called on countries in the region to show support.
Israel stormed a Gaza City neighborhood and told Palestinians to move south.
Israeli forces also bombed the southern city of Rafah in what they called the final phase of an operation against Hamas militants.
Yemen’s Houthis targeted the ‘ship Seajoy’ in the Red Sea with a drone boat and a number of missiles and drones, the Iran-linked group’s military spokesman Yahya Saree said.
The Houthi militia, which controls the most populous parts of Yemen, has carried out months of attacks on ships in the waters off the country’s coast in solidarity with Palestinians fighting Israel in Gaza.
In Europe, Russia is considering a possible deterioration in relations with the West due to the deeper involvement of the US and its allies in the war in Ukraine, but no decision had yet been made, the Kremlin said.
A deterioration of relations – or even a break in them – would illustrate the seriousness of the confrontation between Russia and the West over Ukraine, following escalating tensions over the war in recent months.
The US Energy Information Administration (EIA) reported a weekly increase in crude oil inventories of 3.6 million barrels. Analysts consulted by Reuters had expected a decline of 2.9 million barrels.
“Yesterday’s EIA report is still an overhang for the market today because it was a surprise in terms of the builds we saw and the refinery run rates,” said John Kilduff, partner at Again Capital.
US gasoline inventories rose by 2.7 million barrels. Analysts had expected a draw of 1 million barrels.
“We are now at the height of the summer driving season, approaching the Fourth of July weekend, so if markets move sideways now, we may even see a dip after the holiday weekend,” said Tim Snyder, economist at Matador Economics. .
In Europe, independently held gasoline inventories in storage at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by more than 9% in the week to Thursday, data from Dutch consultancy Insights Global showed, indicating limited space for transatlantic US gasoline demand.
Meanwhile, comments from Atlanta Fed President Raphael Bostic in a policy essay released Thursday reiterated expectations of a rate cut in the fourth quarter of this year, in line with investor expectations of rate cuts starting in September.
“There’s certainly nothing we can hang our hat on if the Fed wants to put pressure on the markets again,” said Kilduff of Again Capital.
