Oct 3 (Askume) – Oil prices rose in early trade on Thursday as investors remained concerned about escalating conflict in the Middle East and possible disruptions to crude flows despite ample supplies in global markets.
Brent crude futures were up 64 cents, or 0.87%, at $74.54 a barrel by 0006 GMT. US West Texas Intermediate crude futures rose 72 cents, or 1.03%, to $70.82 a barrel.
Two people were killed and 11 others injured in an Israeli attack in Beirut’s central Bachura neighborhood on Thursday, the Lebanese Health Ministry said in a statement .
Iran also joined the conflict on Tuesday, firing more than 180 ballistic missiles at Israel , escalating hostilities that have spread from Israel and the Palestinians to Lebanon and eastward.
But an unexpected rise in US crude inventories on Wednesday eased some supply concerns and capped oil price gains.
US crude oil inventories rose by 3.9 million barrels to 417 million barrels in the week to Sept. 27, the US Energy Information Administration said, while analysts polled by Askume had expected a rise of 1.3 million barrels.
“Rising US inventories suggest the market is well supplied and can withstand any disruptions,” ANZ analysts said in a note.
Some investors are surprised that unrest in key producing regions has yet to disrupt global crude supplies and that excess capacity at OPEC has eased their concerns.
Jim Simpson, chief executive of Oriental Daily Analytics, told Askume: “Prices may remain high or volatile for some time after the Iran attack, but production is adequate and global supply is sufficient.”
If Israel destroys Iranian facilities, OPEC has enough spare oil production capacity to make up for all of Iran’s supply losses .
However, traders worry the cartel could be in trouble if Iran retaliates by attacking facilities of its Gulf neighbors.
“If there is another attack on the energy infrastructure of countries in the region, the amount of spare capacity effectively available could be significantly reduced,” said UBS analyst Giovanni Staunovo.
