Oil falls below $73 on rising supply, trade worries

London (Reuters): Oil extended losses yesterday to fall below $72 a barrel, pressured by an industry report that US stockpiles of crude rose unexpectedly and higher OPEC production, adding to indications of more ample supply.

Concern of an imminent escalation in the trade war between the United States and China pressured equities and boosted the US dollar, and also weighed on oil as slowing economies would curb demand.

On 31 July, the American Petroleum Institute said crude inventories rose by 5.6 million barrels last week. Analysts had expected a decrease of 2.8 million. The US government’s supply report was due yesterday. 

Brent crude, the global benchmark, dropped $1.31 to $72.90 a barrel by 1321 GMT, having fallen as low as $72.66. US crude was down $1.05 at $67.71.

 “A fresh dose of price angst has come from an unexpected source,” said Stephen Brennock of oil broker PVM. “The US has been flying the flag for the drawdown in global oil stockpiles, yet the rebalancing paused abruptly last week,” he said, referring to the API report.

Last month, Brent fell more than 6% and US crude slumped about 7%, the biggest monthly declines for both benchmarks since July 2016.

The Organisation of the Petroleum Exporting Countries, plus Russia and other allies, decided in June to ease supply cuts that had been in place since 2017. OPEC production reached a 2018 high in July, a Reuters survey found on 30 July.