(Bloomberg) -- Oil extended losses after a surprise jump in American crude inventories alleviated concerns over a supply crunch, while the demand outlook remained bleak as there was no let up in U.S.-China tensions.
Futures in New York fell as much as 0.8% after tumbling 2.7% on Wednesday, the biggest drop in almost three weeks. American stockpiles rose by 4.7 million barrels to the highest level since mid-2017 last week despite expectations for a drop, while gasoline inventories also climbed. Asian stocks opened lower after the White House was said to be considering cutting off the flow of vital U.S. technology to five Chinese surveillance companies.
Oil is on course for its first monthly loss this year after a dramatic escalation in the trade dispute between the world’s two biggest economies jeopardized the outlook for global growth. While there’s no shortage of supply risks -- including the possibility the Organization for Petroleum Exporting Countries will extend its output curbs or that rising tension in the Middle East will disrupt energy flows -- swelling U.S. stockpiles are mitigating those concerns.
“Both crude and fuel inventories rose, contrary to market expectations, suggesting the economy is getting worse,” said Naohiro Niimura, a partner at Market Risk Advisory in Tokyo. “The American economy may be heading into a cyclical slowdown.”
West Texas Intermediate crude for July delivery fell 36 cents, or 0.6%, to $61.06 a barrel on the New York Mercantile Exchange at 9:56 a.m. in Singapore after being down as much as 49 cents earlier. The contract fell $1.71 to close at $61.42 on Wednesday.
Brent for July settlement declined 35 cents to $70.64 a barrel on the London-based ICE (NYSE:ICE) Futures Europe exchange. The contract lost $1.19 to $70.99 on Wednesday. The global benchmark crude was at a $9.57 premium to WTI.