SINGAPORE (Reuters) – Oil prices dropped by around 1% on Thursday, extending falls from the previous session amid surging U.S. crude inventories and weak demand from refineries.

Brent crude futures, the international benchmark for oil prices, were at $70.36 per barrel at 0652 GMT, down 63 cents, or 0.9%, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down by 51 cents, or 0.8%, at $60.91 per barrel.

Crude futures already fell by around 2% the previous day.

“Rising inventories and a slowdown with refined product demand could suggest we could see further pressure (on prices),” said Edward Moya, senior analyst at futures brokerage OANDA.

U.S. crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Commercial U.S. crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.

Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of U.S. strategic petroleum reserves (SPR) into the commercial market.

U.S. crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

(GRAPHIC: U.S. oil drilling, production & storage levels – tmsnrt.rs/2DxgF8W)

Ole Hansen, head of commodity strategy at Saxo Bank, said “concerns about slowing (oil) demand growth due to the negative impact on the global economy of the U.S.–China trade war” were also weighing on oil prices.

Countering these bearish price factors have been escalating political tensions between the United States and Iran, as well as ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that started in January in an effort to prop up the market.

“Large but opposing forces have kept Brent in a $70-$75 per barrel range in recent weeks,” Morgan Stanley said in a note on oil markets published this week.

“Macro economic data has rapidly deteriorated, and this is reflected in weaker oil demand. At the same time, downside risk to supply is materializing in key countries (adding to OPEC’s production cuts),” the U.S. bank said.

“On balance, however, we still see tightness in 2H19,” Morgan Stanley said, adding it expected Brent to trade in the $75-$80 per barrel range in the second half of 2019.

French bank BNP Paribas said high inventories meant that OPEC would likely keep its voluntary supply cuts in place.

“Supply management is here to stay,” the bank said.