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Oil rises on Middle East tensions, U.S. crude inventory draw

Brent futures

Brent crude futures rose 46 cents, or 0.5%, to $86.70 per barrel, and U.S. West Texas Intermediate crude futures jumped 42 cents or 0.5% to $83.23 per barrel

Oil prices rose on Wednesday after industry data showed a bigger-than-expected draw in U.S. crude stockpiles, while the market kept tabs on tensions in the Middle East.

Brent crude futures rose 46 cents, or 0.5%, to $86.70 per barrel at 0645 GMT. U.S. West Texas Intermediate crude futures jumped 42 cents or 0.5% to $83.23 per barrel.

On Tuesday, both benchmarks rose to their highest since the end of April in intraday trading but closed down on the day as concerns faded that Hurricane Beryl would disrupt production in the Gulf of Mexico. It is expected to weaken into a tropical storm by the time it enters the Gulf of Mexico later this week, as per the U.S. National Hurricane Center.

Having gained previously due to concerns of supplies disruption from Hurricane Beryl, there may be some unwinding as greater clarity points towards limited potential impact, said Yeap Jun Rong, a market strategist at IG.

That said, a significant drawdown in U.S. crude inventories offered some support for prices, while tensions in the Middle East continue, he said.

U.S. crude oil inventories dropped by 9.163 million barrels in the week ended June 28, as per market sources citing American Petroleum Institute (API) figures on Tuesday. However, gasoline inventories added 2.468 million barrels, and distillates dropped by 740,000 barrels.

Oil prices were supported by a U.S. crude inventories draw, but gains were limited as some investors were still seeking to take profits from the recent rally to hit the highest levels since April, according to Mitsuru Muraishi, an analyst at Fujitomi Securities.

The Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, is due to release its weekly data on Wednesday at 1430 GMT.

Meanwhile, U.S. gasoline demand is expected to ramp up as the summer travel season picks up with the Independence Day holiday this week.

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