Oil prices rise after bigger-than-expected fall in USA inventories

US-China brawl drives down oil prices

The U.S. stockpiles and U.S. crude oil production's return to its record 12.3 million barrels per day.

Front-month Brent crude futures, the global benchmark for oil prices, were at $65.86 at 0019 GMT, their lowest since March 11.

According to the U.S. Energy Information Administration (EIA), last week, crude stocks dropped by around 300,000 barrels to 476.49 million barrels.

In the trailing week, U.S. crude oil active futures fell 6.3%.

Oil prices have been supported this year by output cuts from the Organization of the Petroleum Exporting Countries and other major producers, as well as by falling supplies from OPEC members Iran and Venezuela due to USA sanctions.

U.S. West Texas Intermediate (WTI) crude futures were at $55.78 per barrel, down 81 cents, or 1.5%, from their last settlement.

For the month, Brent is on track to fall about 8 per cent and WTI around 11 per cent, which would be the first monthly decline for both contracts in five months.

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However, the trade impasse between the world's two largest oil consumers, the United States and China, continue to worry investors that global oil demand will be weak this year, which is subsequently putting a downward pressure on prices.

"All is not well with the economic world, at least according to bond and commodity traders", Michael McCarthy, chief market strategist at futures brokerage CMC Markets in Australia, wrote in a note published on Friday.

Because of weakening demand, Bernstein said "any upside is capped" in oil markets despite relatively tight supply. This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying, 'he said.

Iranian May crude exports fell to less than half of April levels to around 400,000 barrels per day (bpd), tanker data showed and two industry sources said, after the United States tightened the screws on Tehran's main source of income.

The OPEC-led supply cuts are likely to continue to provide support for crude oil prices, but they may not be strong enough to stop the price decline if demand plunges.

OPEC and other major oil producers, including Russian Federation, pledged in December to cut production by 1.2 million barrels per day in order to prop up prices, effective from this January.

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