Investing.com– Oil prices rose Wednesday, boosted by optimism of summer demand and geopolitical risks from the Middle East conflict, even after unexpected build in U.S. inventories.

At 07:45 ET (11:45 GMT),  rose 0.6% to $84.70 a barrel, while gained 0.7% to $81.36 a barrel. 

US inventories see unexpected build – API 

Data from the, released on Tuesday, indicated that U.S. oil inventories grew by around 0.9 million barrels (mb) in the week to June 21, against expectations for a draw of 3 mb.

The reading came after a 2.3 mb build in the prior week, and factored into fears that U.S. fuel demand remained sluggish despite the onset of the travel-heavy summer season. 

The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday. 

However, U.S. crude oil imports last month rose to a nearly two-year high, according to data from ship tracking service Kpler, rising to 3.1 million barrels per day (bpd) in May, the highest since July 2022.

Refiners scooped up heavy crudes from Canada and Latin America to process into fuels for the summer driving season, raising hopes that demand will increase in the third quarter of the year.

hits “summer peak” – Goldman

Both contracts are still sitting on strong gains over the past two weeks, as persistent geopolitical tensions- Israeli strikes on Gaza and Ukrainian attacks on Russian refineries- kept traders pricing a risk premium into oil prices. 

Brent crude prices have touched their “summer peak” of $86 per barrel, according to projections from analysts at Goldman Sachs.

In a note to clients, the analysts noted that “U.S.-led strong summer traveling activity” and strong global jet demand is continuing to support the benchmark contract.

Persistent geopolitical tensions “remain on the market’s radar,” the bank added.

Rate fears, dollar strength limits crude upside

That said, despite the strength of the past two weeks, overall gains were still held back by concerns over high U.S. interest rates, which saw traders favor the . 

The greenback hovered near two-month highs as recent signs of resilience in the U.S. economy pushed up concerns that the Federal Reserve will have more headroom to keep rates high for longer.

Focus this week is largely on key data, which is the Fed’s preferred inflation gauge and which is likely to drive the central bank’s outlook on rates.

A string of Fed officials also offered up hawkish warnings this week. The prospect of high for longer interest rates has been a key weight on oil prices, as traders fear that economic activity will cool in the coming months. 

(Ambar Warrick contributed to this article.)