Oil hits seven-week high on demand hopes, war jitters

LONDON, June 19 (Reuters): Oil prices hit seven-week highs on Wednesday as summer demand optimism and concerns over escalating conflicts offset an industry report that said U.S. crude inventories unexpectedly rose.

Brent crude futures for August, due to expire on Thursday, were up 20 cents to $85.53 a barrel by 1235 GMT, while the more active September contract gained 21 cents to $84.74.

U.S. West Texas Intermediate crude was up 3 cents to $81.60 per barrel.

"The current snapshot presents an underwhelming picture but there are green shoots that indicate a more optimistic outlook," said Tamas Varga of oil broker PVM.

The Brent price being $8 over the lows hit in early June "shows genuine optimism that the global oil balance will eventually tighten," Varga added.

Both benchmarks, having recovered strongly in the last two weeks, gained more than $1 in the previous session to seven-week peaks after a Ukrainian drone strike led to an oil terminal fire at a major Russian port.