"Brent crude oil rose by more than $1 a barrel on Wednesday after an explosion on a Tel Aviv bus intensified concerns that the clashes between Gaza and Israel could lead to a wider regional conflict that would disrupt oil flows.
Brent crude futures were up about 1.1 percent at around $111 a barrel, off an earlier session-high of $111.18. U.S. crude last rose 0.8 percent to around $87 per barrel. Prices held steady after data showed that crude oil inventories fell by a quicker than expected 1.47 million barrels.
An explosion hit a bus in the heart of Tel Aviv on Wednesday, wounding at least 10 people in what officials said was a terrorist attack.
This dented mounting hopes that a cease-fire may be brokered in coming days.
“It’s the main reason why oil prices are up today against the trend of falling commodities prices,” said Carsten Fritsch of Commerzbank in Frankfurt.
Oil price gains were capped as worries for the demand outlook returned to the fore after euro zone finance ministers ended a meeting in Brussels on Wednesday without agreement on the next tranche of loans to Greece.
Concerns on the U.S. economy also weighed on prices, as Federal Reserve Chairman Ben Bernanke warned that failure to resolve a budget crisis could lead to recession in the world’s biggest oil consumer.
Investors will watch U.S. inventory data from the Energy Information Administration at 1530 GMT for more clues on the outlook for supply.
Crude oil and gasoline inventories were forecast to have increased last week while distillate stockpiles were seen down on higher heating oil demand.
U.S. crude oil inventories tumbled last week due to a drop in imports, data from the American Petroleum Institute released on Tuesday showed.
Total U.S. crude stocks fell by more than 1.9 million barrels in the week to Nov. 16, after analysts polled by Reuters had forecast a build of 900,000 barrels.”