Calm trend in oil

Oil eased to a two-month high on signs of a significant drawdown in U.S. crude inventories. Brent crude traded above $86 a barrel after falling 0.4 percent on Tuesday, while U.S. crude was trading around $83. The American Petroleum Institute reported that crude inventories fell by 9.2 million barrels last week, according to people familiar with the data. If confirmed by official figures later Wednesday, that would be the biggest decline in barrel terms since January. Crude oil has remained strongly higher this year, with futures boosted by risk-on sentiment in stocks as the U.S. benchmark S&P 500 hit record highs. Concerns about a potentially active hurricane season also provided support. Geopolitical risks are also on the table as investors eye elections in France and Britain. In the Middle East, as the escalation of fighting between Israel and Hezbollah threatens to escalate into an all-out war, the Israel Defense Force has warned Palestinians to evacuate parts of Khan Younis in Gaza ahead of a possible new offensive. "The key risk for oil markets is that the Israel-Hezbollah war escalates into a wider conflict. In particular, Iran's more direct involvement in the Israel-Hezbollah war could put Iran's oil supplies and related infrastructure at risk," said Vivek Dhar, an analyst at Commonwealth Bank of Australia.