By Deep Kaushik Vakil and Robert Harvey
LONDON (Reuters) -Brent oil futures were steady on Thursday, hovering slightly below seven-week highs as the market awaited U.S. inventory data.
August Brent crude rose by 18 cents, or 0.21%, to $85.25 a barrel by 1023 GMT.
U.S. West Texas Intermediate (WTI) futures for July, which expire on Thursday, gained 3 cents, or 0.04%, to $81.60.
There was no WTI settlement on Wednesday because of a U.S. public holiday, which kept trading largely subdued. The more active August contract was up 1 cent at $80.72.
Oil prices are likely to remain supported around current levels because of a growing geopolitical risk premium driven by conflict in the Middle East, said ActivTrades analyst Ricardo Evangelista.
Brent crude futures had edged higher in early trade on Thursday as the market digested news of Israeli tanks advancing into Gaza, raising concern over oil supplies from the region.
However, expectations of an inventories build appears to be overshadowing fears of escalating geopolitical stress for now, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors are awaiting release of U.S. inventory data from the Energy Information Administration (EIA) later on Thursday, a day later than usual because of the Juneteenth holiday on Wednesday.
An industry report released on Tuesday showed that U.S. crude stocks rose by 2.264 million barrels in the week ended June 14 while gasoline inventories fell, market sources said, citing American Petroleum Institute figures.
Meanwhile, a gain in fuel prices on Wednesday is buoying refining margins. The ICE gasoil futures premium to Brent crude jumped to $20.63 a barrel on Wednesday, a two-month high.
Firmer fuel refining margins provide a “healthy dose of encouragement for those who have been expecting improvements on the demand side”, said PVM analyst Tamas Varga.
Elsewhere on the demand side, investors await a Bank of England (BoE) interest rate decision at 1100 GMT after the Norwegian central bank kept rates steady and the Swiss National Bank cut rates.
Higher interest rates increase the cost of borrowing, which can slow economic activity and dampen demand for oil.
(Reporting by Robert Harvey in London, Deep Vakil in Bengaluru, Laila Kearney in New York and Jeslyn Lerh in SingaporeEditing by David Goodman)
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