LONDON: Oil prices were stable on Wednesday at around $85 a barrel for Brent crude, amid forecasts for an eventual inventory drawdown during the third quarter peak summer demand season and geopolitical risks from the Middle East conflict.
Brent crude oil futures slipped 9 cents, or 0.11%, to $84.92 a barrel by 1315 GMT. U.S. West Texas Intermediate crude futures shed 7 cents, or 0.09%, to $80.76 a barrel.
The American Petroleum Institute (API) on Tuesday reported U.S. crude oil stocks rose by 914,000 barrels last week, market sources said. Still, analysts on average expected them to decline by 2.9 milllion barrels in official inventory data from the Energy Information Administration, due at 1430 GMT.
The dollar was up 0.3%. Its recent strength has made dollar-priced oil more expensive for buyers holding other currencies.
“The ubiquitous view is that demand will increase during the summer,” said Tamas Varga of oil broker PVM. “Geopolitics is still seen as a supportive element of the equation.”
Suvro Sarkar, energy sector team lead at DBS Bank, said: “It seems the market is shrugging off demand concerns for now, anticipating inventory drawdowns in peak third quarter demand season”.
Strength in front-month prices is also indicating strong physical demand for oil in the near term. August Brent and WTI prices were around 70-75 cents a barrel higher than September prices.
“Crude oil continues to trade within a narrowing range, supported by OPEC+ production curbs, and robust summer demand,” said Ole Hansen, the head of commodity strategy at Saxo Bank.
On the geopolitical front, Houthi attacks on shipping in the Red Sea and mounting Israel-Hezbollah hostilities in Lebanon are also bullish for oil prices, DBS’ Sarkar said.
The Houthis have so far sunk two vessels and seized another, and said on Tuesday they used a missile to hit a vessel in the Arabian Sea.
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