Oil prices extend gains as Yemen bombing continues

SINGAPORE (Reuters) - Oil prices extended gains on Thursday as renewed fighting in Yemen brought focus back on potential supply disruptions in the Middle East.

Saudi-led coalition warplanes continued bombing Yemen on Wednesday despite an announcement by Riyadh that it was ending its campaign of air strikes.

While Yemen itself is not among the biggest oil producers in the region, Gulf producers ship oil along the Gulf of Aden on Yemen's southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti.

Oil prices have risen as much as $10 this month due to supply concerns in the region as well as signs of stronger global demand.

Brent crude for June delivery was up 32 cents at $63.05 a barrel by 0153 GMT, after settling 65 cents higher.

U.S. crude for June delivery was trading 35 cents higher as $56.51 a barrel. The contract had closed 45 cents lower in the previous session.

The U.S. benchmark was weighed by Wednesday's government data showing crude stockpiles rose 5.3 million barrels last week, higher than the 2.9 million-barrel build expected by analysts in a Reuters survey.

It was the 15th consecutive weekly build for crude stocks and pushed U.S. commercial inventories to a record peak.

The U.S. Energy Information Administration (EIA) also said that domestic oil production saw its third weekly decline last week in four.

But some experts said the weekly government data is misleading and that output probably hasn't started falling yet, despite a lower number of rigs drilling for oil.

Executives at the CERA industry gathering in Houston said that with costs of fracking a shale well in the United States falling faster than expected, producers could keep working in oilfields that just months ago looked uncompetitive after the oil price crash.

(Reporting By Jacob Gronholt-Pedersen; Editing by Michael Perry)

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