SEATTLE (Oil Monster): Oil prices rose in volatile trading on Wednesday as investors weighed continued uncertainty over the U.S.-Iran conflict, a shift in political control of Congress and a larger-than-expected decline in U.S. crude inventories.
Brent crude futures rose 82 cents, or 0.8%, to $104.42 a barrel at 0510 GMT, while U.S. West Texas Intermediate crude gained 50 cents, or 0.5%, to $96.59 a barrel after reversing earlier declines.
Brent had settled at its lowest level in nearly four weeks in the previous session as traders weighed diplomatic efforts involving the wars in Iran and Ukraine.
Democrats won control of both chambers of Congress in the U.S. midterm elections, ending unified Republican control for the remainder of President Donald Trump's second term.
The political shift added another layer of uncertainty for markets already trying to assess Washington's next steps in the conflict with Iran.
"President Trump's conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction," said Priyanka Sachdeva, head of market insights at Phillip Nova.
The United States carried out what officials described as defensive strikes on Iran's Qeshm Island on Tuesday, targeting surface-to-air missiles used against U.S. assets.
Another U.S. official said the strikes appeared limited and did not signal a return to major combat operations.
Markets also continued to monitor diplomatic efforts led by Qatar. A senior Iranian official told Reuters that Iran and the United States remained far from an agreement to end the conflict.
Crude is being pulled in opposite directions. Diplomatic signals and political pressure in Washington are limiting some of the geopolitical risk premium, while continued military activity and unresolved Strait of Hormuz supply risks are preventing traders from fully discounting the possibility of renewed disruption.
U.S. crude oil inventories fell by 5.27 million barrels in the week ended October 30, according to market sources citing American Petroleum Institute data.
That contrasted sharply with expectations for an increase of about 880,000 barrels in a Reuters survey of eight analysts.
Gasoline inventories rose by 1.43 million barrels, while distillate stocks declined by 1.19 million barrels.
"Diesel inventories remain tight, while gasoline stocks rose more than expected. The data are broadly supportive of oil prices," Haitong Futures said.
Official U.S. inventory figures from the Energy Information Administration were scheduled for release at 10:30 a.m. EST on Wednesday.
The market remains highly sensitive to developments involving Iran, the Strait of Hormuz and U.S. inventory levels after October's sharp crude rally.
Also Read: Oil Rises After U.S. Strike on Iran's Qeshm Island
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Courtesy: www.reuters.com
