(Reuters) -Oil prices recovered in Asian trading on Wednesday on heightened Middle East tensions, but gains were capped by weak demand.

Brent crude futures rose 17 cents, or 0.16%, to $76.60 a barrel by 0615 GMT. U.S. West Texas Intermediate crude rose 17 cents, or 0.23%, to $73.37.

Hamas named its Gaza leader Yahya Sinwar as successor to assassinated former chief Ismail Haniyeh on Tuesday, a move that reinforces the radical path pursued since the Oct. 7 attack on Israel.

"The uptick in oil prices could possibly be driven by expectations of heightened supply risks due to rising Middle East tensions and a correction from the multi-month low of oil prices. The bearish demand sentiments still remain, and are expected to cap the upside on oil prices," said Vortexa's head of Asia oil analysis Serena Huang.

Supporting the bearish demand view, Chinese trade data showed that its July daily crude oil imports fell to the lowest level since September 2022.

The broader price recovery came after prices slipped earlier in the trading session, following U.S. data showing an unexpected build in crude oil and gasoline inventories.

U.S. crude oil, gasoline and distillate inventories rose last week, according to market sources citing American Petroleum Institute figures on Tuesday. [API/S]

The API figures showed crude stocks were up by 176,000 barrels in the week ended Aug. 2, the sources said, speaking on condition of anonymity. Analysts polled by Reuters had expected crude stocks to fall by 700,000 barrels.

Gasoline inventories rose by 3.313 million barrels against analysts' expectations for a 1 million bbl draw, while distillate stocks rose by 1.217 million barrels, a bigger build than anticipated.

The U.S. Energy Information Administration is due to release weekly inventory data at 10:30 a.m. (1430 GMT) on Wednesday.

On Monday, Brent futures slumped to their lowest since early January and WTI futures touched their lowest since February, as a global stock market rout deepened on growing concerns of a potential recession in the U.S., the world's largest petroleum consumer.

However, both benchmarks broke a three-session declining streak on Tuesday as tensions in the Middle East stoked supply concerns.

Iran's vow of retaliation against Israel and the U.S. following the killing of two militant leaders has raised concerns that a wider war is brewing in the Middle East.

"Any escalation of the conflict in the Middle East could see a greater risk of disruptions to supplies from the region," ANZ analyst Daniel Hynes said.

Lower production at Libya's 300,000 barrel-per-day (bpd) Sharara oilfield is also adding to concerns of supply shortages.

Global oil inventories decreased by around 400,000 bpd in the first half this year, according to U.S. Energy Information Administration (EIA) estimates published on Tuesday. It expects stockpiles to decline by around 800,000 bpd in the second half of the year. [EIA/M]