By Adedapo Adesanya
Oil dipped on Wednesday after hitting seven-week highs as summer demand optimism and concerns over escalating conflicts, with Brent crude futures down by 6 cents or 0.1 per cent to $85.27 a barrel and the US West Texas Intermediate (WTI) crude futures going down by 10 cents or 0.1 per cent to $81.47 per barrel.
Both benchmarks, having recovered strongly in the last two weeks, gained more than $1 in the previous session after a Ukrainian drone strike led to an oil terminal fire at a major Russian port.
Several oil storage tanks in the town of Azov caught fire after a drone attack early on Tuesday.
Ukraine has often maintained that targeting Russia’s energy, military and transport infrastructure undermines Russia’s war effort.
Meanwhile, 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 oil-producing region and could see prices skyrocket.
Trading activity was however slim due to a US federal holiday to celebrate Juneteenth, which is held every June 19.
Also, recent US economic data supported bets the US Federal Reserve would move towards cutting interest rates in the coming months.
China data this week showed May industrial output lagged expectations, but retail sales, a gauge of consumption, marked the quickest growth since February.
US crude stocks rose by 2.264 million barrels in the week ended June 14, market sources said on Tuesday, citing American Petroleum Institute (API) figures.
Standard Chartered forecast that global oil demand would reach a new record in May and then go beyond that in June.
In a report released on Tuesday, Standard Chartered put the actual April oil demand at 101.77 million barrels per day, or 470,000 barrels per day higher than its previous forecast.
The markets will have to take an extra day to receive the official US stockpile report from the Energy Information Administration (EIA) due to the US holiday.
Modupe Gbadeyanka