Expiring Brent up in choppy trade, U.S. crude down on supply glut

NEW YORK (Reuters) - Brent (brent.167)crude futures edged up in choppy trading as the June contract headed to expiration on Thursday, while U.S. crude prices pulled back as an ample global supply picture weighed on sentiment.

Prices, especially Brent's, received support from news that Iran's Revolutionary Guard fired warning shorts over a Singapore-flagged oil products tanker in international waters in the Gulf.

Trading was choppy as market participants tried to square bullish factors including U.S. inventory data, spot demand for crude in Asia and Middle East unrest with basic supply fundamentals.

"The market is really in a pause," said Harry Tchillgurian at BNP Paribas. "The longer the price stays up, the more you invite supply to come back to the market."

Expiring Brent June crude was up 19 cents at $67 a barrel at 11:43 a.m. EDT (1543 GMT), having swung from $66.32 to $67.29.

July Brent was down 38 cents at $66.89.

U.S. June crude was down 85 cents at $59.65.

Dollar-denominated oil prices received support from a weaker U.S. currency in early trading on Thursday, before the dollar reversed earlier losses. [.DXY]

But traders focused on lingering oversupply and shaky economic data globally, which sparked questions over the sustainability of prices that are within touching distance of 2015 highs reached last week.

While crude stocks in the United States fell for a second straight week, by 2.2 million barrels, following four months of steady gains, stockpiles were still almost 90 million barrels higher than this time last year. [EIA/S]

"While the total draw of 2.2 million barrels was more than expected, we will note that supply surplus against five year averages remains substantial at more than 100 million barrels," Jim Ritterbusch, president at Ritterbusch & Associates, said in a research note.

A surprise increase in output in the No. 2 U.S. oil-producing state, North Dakota, in March added to supply concerns. The International Energy Agency also warned on Tuesday that the global oil glut is building.

Global demand growth for fuels was also in question, with weak economic indicators pulling crude oil lower during earlier trading.

China, the world's top energy consumer, saw its economy losing more steam in April despite easier monetary policy, while Europe's largest economy, Germany, slowed in the first quarter. In the United States, retail sales were flat in April, dampening hopes of a sharp rebound in growth in the second quarter.

(Additional reporting by Libby George in London and Florence Tan in Singapore, Editing by Vincent Baby, William Hardy and Meredith Mazzilli)

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