Oil prices fall on surging US crude stockpiles, economic concerns

Oilprices dropped on Thursday, extending falls from the previous session amid surging UScrude inventories and weak demand from refineries.

Brent crude futures, the international benchmark foroilprices, were at $70.62 per barrel at 0109 GMT, down 37 cents, or 0.5 per cent, from their last close.

US West Texas Intermediate (WTI) crude futures were down by 31 cents, or 0.5 per cent, at $61.11 per barrel.

Crude futures already fell by around 2 per cent the previous day.

"Rising inventories and a slowdown with refined product demand could suggest we could see further pressure (onprices)," said Edward Moya, senior analyst at futures brokerage OANDA.

The UScrudeoilinventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Commercial UScrude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.

Beyond weak refinery demand for feedstock crudeoil, the increase in commercial inventories also came on the back of planned sales of USstrategic petroleum reserves (SPR) into the commercial market.

The UScrudeoilproduction climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

Ole Hansen, head of the commodity strategy at Saxo Bank, said "concerns about slowing (oil) demand growth due to the negative impact on the global economy of the US-Chinatrade war" were also weighing onoilprices.

Countering these bearishpricefactors have been escalating political tensions between the United States and Iran, as well as ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that started in January in an effort to prop up the market.

"Large but opposing forces have kept Brent in a $70-$75 per barrel range in recent weeks," Morgan Stanley said in a note onoilmarkets published this week.

"Macroeconomic data has rapidly deteriorated, and this is reflected in weakeroildemand. At the same time, the downside risk to supply is materialising in key countries (adding to OPEC's production cuts)," the US bank said.

"On balance, however, we still see tightness in 2H19," Morgan Stanley said, adding it expected Brent to trade in the $75-$80 per barrel range in the second half of 2019.

French bank BNP Paribas said high inventories meant that OPEC would likely keep its voluntary supply cuts in place. "Supply management is here to stay," the bank said.