Oil prices fell about 2 percent as a surprise increase in U.S. crude stockpiles fed concerns about global oversupply, while investors worried that trade tensions could hit energy demand.
Brent crude futures LCOc1 fell $1.82 to settle at $72.39 a barrel, a 2.5 percent loss.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.10 to settle at $67.66 a barrel, a 1.6 percent loss.
U.S. crude inventories USOILC=ECI rose 3.8 million barrels as imports jumped, the government’s Energy Information Administration said. Analysts polled by Reuters had expected a decrease of 2.8 million barrels.
Still, oil futures pared losses briefly after the data, which also showed growing U.S. demand.
“It was surprising to see the build in crude, but it was a little bit offset by the bigger-than-expected draw in gasoline and the draw in Cushing,” said Tariq Zahir, managing member at Tyche Capital Advisors.
Gasoline stocks USOILG=ECI declined 2.5 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures USOICC=ECI fell by 1.3 million barrels, EIA data showed.
The EIA reported that U.S. crude production fell 30,000 barrels per day to 10.44 million bpd in May.
Oil prices are also being pressured by concern that global trade tensions could crimp economic growth.
China said it would hit back if the United States takes further steps hindering trade, as the Trump administration considers slapping a 25 percent tariff on $200 billion worth of Chinese goods.
Last month, Brent fell more than 6 percent and U.S. crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016.
Russian oil production last month was on average above the level Moscow promised following the Organization of the Petroleum Exporting Countries and non-OPEC meeting in June, energy minister Alexander Novak indicated. Novak said that higher production was due to the need to maintain the market’s stability.
His comments indicate that Russia was producing above the level announced by Moscow after the OPEC+ meeting in June. Last month, Novak had said that Russia may surpass the 200,000 bpd level of increases if there is a need for it.
A Kuwaiti official said the country increased production in July by 100,000 bpd from June’s average.
A Reuters survey found that OPEC production reached a 2018 high in July. OPEC, plus Russia and other allies, decided in June to ease supply cuts in place since 2017.
“Brent futures continue to be pressured by last month’s sharp upswing in Saudi and Russian crude exports that have forced a temporary supply glut that will require some slowing in output gains this month, especially from the Saudis,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.