Oil down on ample supply as June Brent expires

Oil futures pulled back as ample global supply weighed on prices while Brent’s front-month June contract headed to expiration.

Trading was choppy as market participants tried to square bullish factors, including recent drops in US inventories, spot demand for crude in Asia and Middle East unrest, with basic supply fundamentals of historically high inventories and ample production.

Expiring front-month Brent June crude fell 22 cents to settle at $66.59 a barrel. July Brent fell 57 cents to settle at $66.70. US June crude fell 62 cents to settle at $59.88.

Falling US refined products inventories and falling weekly jobless claims in the United States supported products futures.

Dollar-denominated crude oil was lifted by a weaker US currency in early trading, before the dollar recovered from lows.

Oil also briefly received support from news that Iran’s Revolutionary Guard fired warning shots over a Singapore-flagged oil products tanker in international waters in the Gulf.

Iran appeared to be trying to intercept the ship in order to settle a legal dispute, US official said.

But traders focused on lingering oversupply and shaky economic data globally. While crude stocks in the United States fell for a second straight week, by 2.2 million barrels, following four months of steady gains, inventories were still almost 90 million barrels higher than this time last year.

China, the world’s top energy consumer, lost more economic steam in April despite easing monetary policy, while Europe’s largest economy, Germany, slowed in the first quarter. In the United States, retail sales were flat in April, curbing hopes of a sharp rebound in growth in the second quarter.