Oil prices hit seven-week highs on optimism over summer demand

On Wednesday, oil prices surged to a seven-week high driven by the combined influence of heightened summer demand expectations and concerns over escalating conflicts. Despite a report indicating an unexpected increase in U.S. crude inventories, Brent crude futures experienced a 0.3% increase to $85.56 per barrel by 1525 GMT. Similarly, U.S. West Texas Intermediate crude rose by 0.2% to reach $81.75 per barrel.

Tamas Varga, an oil broker at PVM, highlighted that although the current situation presents an underwhelming image, there are positive indicators that point to a more optimistic future. He noted that the Brent price, which is currently $8 higher than the lows in early June, reflects genuine optimism about the eventual tightening of the global oil balance.

Impact of Geopolitical Events

Both benchmarks experienced a strong resurgence in the last two weeks, with a significant increase to seven-week peaks after a Ukrainian drone strike caused an oil terminal fire at a major Russian port. Meanwhile, in the Middle East, Israeli Foreign Minister Israel Katz warned of a potential "all out war" with Lebanon's Hezbollah. This announcement raised concerns about potential supply disruptions in the key oil-producing region.

The industrial output data from China in May fell short of expectations, while retail sales, a key indicator of consumption, displayed the fastest growth since February. On the other hand, U.S. crude stocks reportedly increased by 2.264 million barrels for the week ending June 14, contradicting the forecasted 2.2 million barrel draw by analysts.

Furthermore, gasoline inventories witnessed a decline of 1.077 million barrels, while distillates rose by 538,000 barrels. Official stocks data from the U.S. Energy Information Administration is anticipated to be released on Thursday.