Oil gave up the previous day’s gains as swelling U.S. stockpiles overshadowed the possibility of an attack on Israel by Iran or its proxies.

West Texas Intermediate fell 1.4 per cent after crude inventories in the U.S. rose 5.84 million barrels last week, holding at the highest since July. Still, oil settled just above US$85 a barrel as the U.S. and its allies brace for Iran to strike Israel in retaliation for an attack on a diplomatic compound in Syria last week.

Adding to the headwinds in recent days was a hot U.S. inflation print, which may delay rate cuts from the Federal Reserve.

Oil is up about 19 per cent this year, driven by geopolitical tensions and OPEC+ supply cuts. The producer group said the oil market will need close monitoring over the summer, when demand is expected to surge.

Many of the world’s top traders and Wall Street banks are shifting toward a bullish sentiment, with some seeing a possible return to $100 for the global benchmark. However, Macquarie Group said Brent will enter a bear market in the second half, with recent gains unlikely to hold if geopolitical events don’t lead to actual supply disruptions.

Prices:

• WTI for May delivery slipped 1.4 per cent to settle at $85.02 a barrel in New York.
• Brent for June settlement dipped 0.8 per cent to settle at $89.74 a barrel.