Oil dips on demand worries after unexpected US crude build

Oil prices fell for a second day on Wednesday after a surprise rise in U.S. crude inventories stoked demand concerns on the heels of weaker-than-expected economic data from the United States and China, the world's two biggest oil consumers.

Brent crude futures was 29 cents lower, or down by 0.4%, to $74.60 a barrel. U.S. West Texas Intermediate crude edged down by 32 cents, also 0.4% down, to $70.55, as of 0005 GMT.

U.S. crude stockpiles rose by about 3.6 million barrels in the week ended May 12, according to market sources citing American Petroleum Institute figures. Seven analysts polled by Reuters, had expected a 900,000 barrel drawdown.

That added to concerns about U.S. growth after data showed retail sales rose 0.4% in April, short of estimates for an increase of 0.8%.

"The global economic outlook has too many question marks and that is not giving energy traders a lot of confidence in buying crude. Right now too much oil is still available," Edward Moya, senior market analyst at OANDA, said in a note.

Talks on raising the U.S. debt ceiling continue to weigh on the market. The U.S. Treasury Department has estimated that the United States will go into a crippling default as early as June 1 if Congress does not lift the debt ceiling.

In China, April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter.

Markets are closely following any new steps on expanding sanctions on Russia by the Group of Seven (G7) leaders when they meet in Japan on May 19-21.

G7 is looking to target sanctions evasion involving third countries, aiming to limit Russia's future energy production and curb trade that supports Russia's military, officials with direct knowledge of the discussions have said.

European Union foreign policy chief Josep Borrell told the Financial Times separately the EU should crack down on India reselling Russian oil into Europe as refined fuel.

India's Prime Minister Narendra Modi plans to attend the G7 summit as a guest and would meet with Biden.

Oil prices fell even as the International Energy Agency raised its forecast for global oil demand this year by 200,000 barrels per day (bpd) to a record 102 million bpd.