Oil is falling on a surprise surge in US stocks, but tension in the Middle East is supporting it

Economy and stock exchange

Oil prices fell on Wednesday after data showed a surprise rise in US crude inventories and China's industrial output growth in April was lower than expected, but prices were boosted by rising tension in the Middle East.

Global crude futures fell 20 cents, or 0.3 percent, from their last close to $ 71.04 a barrel at 0358 GMT. Brent closed up 1.4% on Tuesday.

US WTI crude futures fell 40 cents, or 0.7 percent, from the previous settlement to $ 61.38, and closed the previous session up 1.2 percent.

US Petroleum Institute data showed US crude stocks rose unexpectedly last week, while gasoline inventories and distillates increased.

Inventories rose 8.6 million barrels in the week ending May 10 to 477.8 million barrels, compared with analysts' expectations of a drop of 800,000 barrels and the Energy Information Administration of the US Department of Energy announced official figures later in the day.

"If the Energy Information Management report confirms the increase in inventories, we may see this pressure on oil prices," said Edward Moya, chief market analyst at Oanda. "But many geopolitical risks remain, which keeps price support."

On Tuesday, Saudi Arabia said booby trapped bombers struck two oil pumping stations in the kingdom two days after two Saudi oil tankers were sabotaged off the coast of the United Arab Emirates, while the US military said it was preparing "for real or imminent threats to US forces in Iraq "From Iranian-backed forces.

The attacks came on the back of US-Iranian tensions following Washington's decision this month to try to cut Iran's oil exports to zero and strengthen its military presence in the Gulf in response to what it said were Iranian threats.

On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that global demand for its oil will increase than expected this year as the growth of supplies of competitors such as rock producers in the United States, pointing to the market is more scarce if the Organization did not increase production.

Meanwhile, China's industrial output growth slowed more-than-expected to 5.4 percent in April from a four-and-a-half-year high in March, reinforcing views that Beijing should introduce more stimulus measures as the trade war with the United States intensifies.

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