08:57 AM EDT, 06/27/2024 (MT Newswires) -- Oil prices rose early on Thursday as traders continue to bet on solid summer demand even as U.S. inventories of oil and gasoline rose last week, while Mideast tensions are rising again.

West Texas Intermediate crude oil for August delivery was last seen up US$0.50 to US$81.40 per barrel, while August Brent crude, the global benchmark, was up US$0.61 to US$85.86.

The rise comes even after the Energy Information Administration on Wednesday reported U.S. oil inventories climbed by 3.6-million barrels, while the consensus estimate called for a drop of 2.8-million barrels and the five-year average draw for the week is 6.3-million barrels, according to Tudor, Pickering, Holt.

Gasoline inventories rose by 2.7-million barrels, against expectations for a one-million barrel draw.

"An unexpected rise in U.S. crude stockpiles while implied demand for the three main fuels (gasoline, diesel and aviation fuels) fell for the first time in two months," Saxo Bank noted.

Despite the weak demand, geopolitical risk is offering support for the market as Israel continues to carry out its war against Hamas in Gaza while increasing its conflict with the Iran-backed Hezbollah militant group in Lebanon.

"If it were not for the steady and incremental ratcheting up of geopolitical risk in the Middle East, oil prices might have found themselves on the back end of a much more negative day," PVM Oil Associates noted. "Israel's continued action in Gaza and now developing engagement with Hezbollah in the North is causing disquiet yet again and that discomfiture appears to be spreading."