Oil prices extend drop as trade wars stoke global economic fears

* Price decline of around 1% follows over 3% fall on Friday
* May saw biggest oil price drop since November
* U.S. trade wars with China, Mexico threaten growth
-Goldman
* Surging U.S. oil supply also weighs: https://tmsnrt.rs/2DwTUBQ

By Henning Gloystein
SINGAPORE, June 3 (Reuters) - Oil prices fell more than 1%
on Monday to extend losses of over 3% from Friday, when crude
markets racked up their biggest monthly losses in six months
amid stalling demand as trade wars fanned fears of a slowdown in
the global economy.
Front-month Brent crude futures LCOc1 , the international
benchmark for oil prices, were at $60.97 at 0044 GMT. That was
$1.02 cents, or 1.7%, below last session's close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were
at $52.71 per barrel, down 79 cents, or 1.5%.
The drops followed price slumps of more than 3% on Friday,
which made May the worst-performing month for crude futures
since last November. Edward Moya, senior market analyst at futures brokerage
OANDA in New York, said last month's crude oil price fall of
more than 10% was "the worst May performance in seven years as
the escalation of the global trade war saw the global growth
outlook crumble".
While Moya warned "geopolitical risks remain in place", he
added that "oil remains vulnerable" because of a weakening
demand outlook for crude.
"The U.S.-China feud remains most critical to the global
growth outlook, but the addition of trade tensions between the
U.S. and Mexico raised the slower demand picture for the
Americas," he said.

RISING U.S. SUPPLY
U.S. bank Goldman Sachs said in a note published on Sunday
that "escalating trade wars and weaker activity indicators have
finally caught up with oil market sentiment".
Brent crude oil prices have dropped almost 20% from their
2018-peak in late April.
"The magnitude and velocity of the move lower were further
exacerbated by growing concerns over strong U.S. production
growth and rising inventories," Goldman said.
U.S. energy firms this week increased the number of oil rigs
operating for the first time in four weeks, and weekly
production C-OUT-T-EIA last stood at a record 12.3 million
barrels per day (bpd).
That's pushed up commercial U.S. crude oil inventories
C-STK-T-EIA , which have increased by 8.4% since the start of
the year to 476.5 million barrels.
"With an increasingly uncertain macro outlook as well as
rising U.S. production and large available core-OPEC spare
capacity helping offset declining supply from Iran and
Venezuela, we instead expect prices will likely remain around
our 3Q forecasts and current levels, albeit with still high
price volatility," Goldman said.
The bank's Brent price forecast for the third quarter of
this year was $65.5 per barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: U.S. oil drilling, production & storage levels https://tmsnrt.rs/2DxgF8W
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>