Oil prices rose in Asian trading as markets assessed the escalating tensions in the Middle East in contrast to the sudden increase in US crude inventories that pushed oil prices down by about 80 cents in the previous session.
US West Texas Intermediate crude futures rose 20 cents, or 0.28 percent, to $71.57 a barrel by 0202 GMT. Brent crude futures also increased 21 cents, or 0.27 percent, to $77.01 per barrel.
The Energy Information Administration said on Wednesday that US crude inventories rose by 1.3 million barrels in the week ending January 5 to 432.4 million barrels, versus analysts’ expectations of a decline of 700,000 barrels.
Factors putting pressure on the downside, including rising inventories and increased production, are offset by factors such as rising tensions in the Middle East, IG Group analysts wrote in a note. They said they expect to see prices ranging between $67 and $77 in the near term.
On Wednesday, the Houthis in Yemen launched their largest attack so far on commercial shipping lines in the Red Sea. The United States and Britain indicated that they would take further measures if the attacks continued. The United Nations Security Council issued a resolution demanding an immediate end to the strikes.
The intensity of Israeli strikes on the southern and central Gaza Strip also increased on Wednesday.
The Chinese Customs Administration is scheduled to release trade data for December on Friday, which will provide a picture of overall demand for the full year in the world's largest oil buyer.
