UPDATE 8-Oil firms on Middle East uncertainty, shrugs off U.S. crude build


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    * U.S. crude stocks rise unexpectedly to highest since 2017
    * Attacks on tankers, Saudi oil infrastructure help prices
    * U.S. pulls staff from Iraq amid concerns over Iran
    * U.S. oil output, inventories: https://tmsnrt.rs/2WhrAut

 (Updates prices and market activity to settlement, adds analyst
    By Laila Kearney
    NEW YORK, May 15 (Reuters) - Oil futures inched up on
Wednesday as the prospect of mounting tensions in the Middle
East hitting global supplies overshadowed an unexpected build in
U.S. crude inventories.
    Brent crude  LCOc1  settled at $71.77 a barrel, gaining 53
cents or 0.7%. West Texas Intermediate (WTI) crude futures
 CLc1  settled at $62.02 a barrel, climbing 24 cents or 0.4%.
    U.S. crude inventories rose unexpectedly last week to their
highest since September 2017, while gasoline stockpiles
decreased more than forecast, the Energy Information
Administration (EIA) said.  urn:newsml:reuters.com:*:nL2N22R0SJ  EIA/S 
    Crude stocks  USOILC=ECI  swelled by 5.4 million barrels,
surprising analysts who had expected a decrease of 800,000
    Still, the build was smaller than the nearly 9
million-barrel build estimate on Tuesday by the American
Petroleum Institute (API), a trade group, which helped lift
crude price sentiment. The drawdown in gasoline stocks also
helped oil futures, analysts said, with U.S. gasoline futures
 RBc1  gaining about 2%. 
    Rising uncertainty in the Middle East, however, boosted
crude prices the most.
    "Although crude oil inventories built more than the market
expected due to higher imports, prices remained supported due to
the geopolitical dynamics of the Middle East," said Andrew
Lipow, president of Lipow Oil Associates in Houston. 
    Oil prices have drawn support since Saudi Arabia said on
Tuesday that armed drones struck two oil pumping stations, two
days after the sabotage of oil tankers near the United Arab
Emirates.  urn:newsml:reuters.com:*:nL2N22Q1AW
    "Given that nearly one-third of global oil production and
nearly all of global spare capacity are in the Middle East, the
oil market is very sensitive to any attacks on oil
infrastructure in this region," Swiss bank UBS said.
    The attacks took place against a backdrop of U.S.-Iranian
tension. Washington has been trying to cut Iran's oil exports to
zero with sanctions while beefing up the U.S. military presence
in the Gulf.
    Washington ordered the departure of non-emergency American
employees from its diplomatic missions in Iraq on Wednesday in
show of concern about threats from Iran-backed forces.
    "There could be a pretty serious conflict with Iran should
they do something to U.S. forces in the region, and that would
spike the price of oil," said Josh Graves, senior commodities
strategist at RJO Futures in Chicago. 
    However, a clash could prove bearish if it prompts Saudi
Arabia to ramp up supply "given the kingdom’s sizable amount of
unused output capacity," Jim Ritterbusch of Ritterbusch and
Associates said in a note. A supply-disruption could also lead
the United States to boost its oil output, he said.
    The International Energy Agency said the world would require
very little extra oil from the Organization of the Petroleum
Exporting Countries this year as booming U.S. output will offset
falling exports from Iran and Venezuela.  urn:newsml:reuters.com:*:nL5N22R2RQ 
    The energy watchdog also revised its forecast for 2019
growth in global oil demand 90,000 barrels per day lower to 1.3
million bpd.

TECHNICALS: U.S. oil still targets $59.31      urn:newsml:reuters.com:*:nL4N22R0PK
TECHNICALS: Brent oil may retest support at $69.98   
GRAPHIC: U.S. oil production & inventory levels    https://tmsnrt.rs/2WksBC7
 (Additional reporting by Ahmad Ghaddar in London, Scott
DiSavino in New York, Aaron Sheldrick in TOKYO and Colin Packham
in SYDNEY; Editing by Marguerita Choy and David Gregorio)
 ((Laila.kearney@thomsonreuters.com; (917) 809-0054))

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