The prospect of a long-term tariff war between China and the United States also pressured prices.
West Texas Intermediate crude for July delivery fell 53 cents, or 0.9 per cent, to $60.89 a barrel on the New York Mercantile Exchange at 7:24am in London after being down as much as 63 cents earlier. The contract is down 7% this week, heading for the biggest weekly loss since December 21. Weak refinery output lifted U.S. crude inventories last week to their highest levels since July 2017, according to data from the Energy Information Administration cited by Reuters.
"Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher", Lawler said.
"However, it is still set to record the worst week of the year and this is due to the increase in trade war tensions between the United States and China". In particular, refining usage in the Midwest region plunged to its lowest levels in May since 2013.
The EIA data showed commercial USA crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels.
USA crude inventories are the highest since July 2017, with worries about escalation of the U.S.
Active rig count in the US drops to 797.
"Despite a rising national gas price average that is inching closer to the $3 per gallon mark, the vast majority of holiday travelers will drive to their destinations", AAA said last week.
Brent crude prices dropped below $68 per barrel for the first time in almost two months today, putting pressure on FTSE-listed explorers, after USA inventories surged to their highest point in nearly two years. A shale boom has helped make the United States the biggest oil producer in the world, ahead of Saudi Arabia and Russian Federation.
Commercial US crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, the EIA data showed.
Some analysts expect gains to be short-lived.
Meanwhile, U.S. President Trump today announced that they will be sending about 1500 troops to the Middle East after Pentagon said that Iran's revolutionary guards were directly responsible for attacks on tankers off UAE, suggesting that the tension in the area is likely to remain escalated in the near-term, which could continue to limit oil's losses.
Nevertheless, the recent price action in crude raises the risk for a larger correction as the price of oil snaps the monthly opening range, with the downside targets now on the radar as crude prices fail to preserve the upward trend from earlier this year. Under these tight market conditions, prices are higher in the nearby futures contracts than in the deferred futures contracts.
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