Oil prices increased on Wednesday over a positive demand outlook in the US, the world's largest oil consumer, uncertainty over the timing of the US Federal Reserve's (Fed) rate cut, and escalating tension in the Middle East, presenting a threat to global oil routes.
International benchmark Brent crude traded at $84.62 per barrel at 10.25 a.m. local time (0725 GMT), an increase of 0.47% from the closing price of $84.22 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $81.28 per barrel at the same time, a 0.55% rise from the previous session that closed at $80.83 per barrel.
Market expectation is for crude oil inventories in the US to decrease by 2.6 million. The US Energy Information Administration (EIA) will release official inventory data later in the day.
Prices are predicted to increase even further if official data from the EIA reveals a fall in oil stockpiles.
Meanwhile, ongoing uncertainties over the timing of the Fed interest rate cut continue to influence prices.
Analysts noted that Fed officials want to see more evidence of inflation slowing down and expect growth data to be released on Thursday and personal consumption expenditure data due on Friday to give clues about the Fed's roadmap in the coming period.
Fed Board Member Michelle Bowman said Tuesday that reducing the Fed's policy rate too soon or quickly could result in a rebound in inflation, which in turn would require further policy rate increases in the future to return inflation to the central bank's 2% target in the long run.
Escalating geopolitical tensions in the Middle East, home to a vast majority of global oil reserves, also supported upward price movements by fueling market players' concerns over the possibility of a disruption in global energy supply routes.
An Iraqi resistance group announced early Wednesday that a combat drone had struck a target in Eilat, southern Israel.
The group, however, did not disclose the nature of the target, but stressed that they would 'continue to destroy enemy (Israeli) strongholds.'
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr