SINGAPORE: Oil prices eased slightly during trade on Wednesday but held near their highest levels in seven weeks, as the market weighed concerns over escalating conflicts against demand worries following an unexpected build in US crude inventories, according to Reuters. Brent crude futures eased 17 cents to $85.16 a barrel by 9:35 a.m. Saudi time, while US West Texas Intermediate crude was down 22 cents to $81.35 per barrel. Both benchmarks gained more than $1 in the previous session after a Ukrainian drone strike led to an oil terminal fire at a major Russian port, according to Russian officials and a Ukrainian intelligence source. In the Middle East, Israeli Foreign Minister Israel Katz warned of a nearing “all out war” with Lebanon’s Hezbollah, even as the US attempted to avoid a broader conflict between Israel and Iran-backed Hezbollah. An escalating war in the region raises the prospect crude supply from key producers could be disrupted. Oil prices had recovered quite strongly in the last two weeks, amid potential disruption risks “in the event of a wider conflict, as geopolitical tensions are brought to a new front between Israel and Hezbollah,” said Yeap Jun Rong, a market strategist at IG in Singapore. “Any cooling off between both parties seems difficult in the near term, which may keep oil prices well-supported as market participants shrug off pockets of weakness on the economic front, from weaker-than-expected US retail sales to mixed sets of data out of China this week.” China data this week showed May industrial output lagged expectations, but retail sales, a gauge of consumption, marked their quickest growth since February. Analysts in an ANZ Research report on Wednesday said a broader risk-on tone across global markets supported crude oil prices. Mixed US economic data for May has boosted bets the Federal Reserve will cut rates sooner rather than later, the analysts added, referring to strong industrial production and retail sales that barely rose. Fed officials are looking for further confirmation that inflation is cooling and for any warning signs from a still-strong labor market as they steer cautiously toward what most expect to be an interest rate cut or two by the end of this year. Interest rate cuts could reduce borrowing costs, spurring economic activity and lifting oil consumption. Capping oil prices however, US crude stocks rose by 2.264 million barrels in the week ended June 14, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts polled by Reuters had expected a 2.2 million barrel draw in crude stocks. Gasoline inventories, however, fell by 1.077 million barrels, while distillates rose by 538,000 barrels, the sources said, speaking on condition of anonymity. Official US stocks data from the Energy Information Administration are due at 6.00 p.m. Saudi time.