Oil prices settle up over $1 after global tensions mount; oversupply caps gains

Core Insights - Oil prices increased by more than $1 a barrel due to concerns over potential supply disruptions following geopolitical tensions, despite a report indicating rising U.S. oil supplies [1][2][3] Geopolitical Factors - Poland's downing of drones amid a Russian attack in Ukraine marked the first military engagement by a NATO member in the conflict, contributing to heightened geopolitical tensions [3] - U.S. President Donald Trump has called for the EU to impose 100% tariffs on major buyers of Russian oil, including China and India, to pressure Russia into peace talks [4] Market Reactions - Brent crude futures rose by $1.10 (1.7%) to $67.49 per barrel, while U.S. West Texas Intermediate crude futures increased by $1.04 (1.7%) to $63.67 per barrel [2] - Following the Israeli attack on Hamas leadership, oil prices initially surged nearly 2% before retracing most gains, indicating market volatility [3] Supply and Inventory Data - U.S. crude inventories increased by 3.9 million barrels for the week ending September 5, contrary to analyst expectations of a 1 million barrel draw [6] - Gasoline stocks rose by 1.5 million barrels, while distillate inventories increased by 4.7 million barrels, both exceeding analysts' forecasts [7] Economic Outlook - The Federal Reserve is expected to cut U.S. interest rates, which could stimulate economic activity and increase oil demand [5] - U.S. Energy Secretary Chris Wright indicated that strong global economic growth in the coming years is likely to boost oil demand, although U.S. oil production may plateau temporarily [5]