UPDATE 9-Oil loses about 2% on swelling U.S. stockpiles, demand worries

* U.S. crude inventories rise to highest since July 2017
* U.S. gasoline stocks also show surprise build
* Mnuchin says more U.S. tariffs on China at least a month
away
* Saudi pledges to keep oil markets balanced, sustainable

(Updates prices and market activity to settlement, adds analyst
comments)
By Laila Kearney
NEW YORK, May 22 (Reuters) - Oil prices fell about 2% on
Wednesday as an unexpected build in U.S. crude inventories
compounded investor worries that a trade fight between
Washington and Beijing could dent crude demand over the long
haul.
Brent crude futures LCOc1 settled at $70.99 a barrel,
dropping $1.19, 1.7%. U.S. West Texas Intermediate (WTI) crude
futures CLc1 ended $1.71, or 2.7%, lower at $61.42 a barrel.
U.S. crude inventories swelled by 4.7 million barrels in the
latest week to their highest since July 2017 at 476.8 million
barrels, the U.S. Energy Information Administration reported.
Analysts polled by Reuters had predicted a decrease of 599,000
barrels. "It's at the extreme end of the range of possibilities for a
bearish report," said Bob Yawger, director of futures at Mizuho
in New York. "It's about as bad as it could have been
considering the fact that driving season is so close."
Gasoline stocks posted a surprise build as well, rising by
3.7 million barrels compared with analysts' expectations for an
816,000-barrel drop, despite steady gasoline demand heading into
peak driving season.
"Refiners are running at a subdued pace for this time of
year," which contributed to the builds, said John Kilduff, a
partner at Again Capital LLC in New York.
The prospect of a long-term tariff war between China and the
United States also pressured prices. Additional talks between
top officials have not been scheduled since the last round ended
in a stalemate on May 10, when U.S. President Donald Trump
imposed the higher levies on Chinese goods. U.S. Treasury Secretary Steven Mnuchin said Washington is at
least a month away from enacting its next round of tariffs on
Chinese imports as it studies the impact on consumers.
The conflict is weighing on economic growth forecasts and
oil demand predictions. The Organization for Economic
Co-Operation and Development (OECD) on Tuesday revised down its
global growth forecast for the year. A slump in equities, which oil futures often follow,
deepened the fall in oil prices. .N
Growing tensions between the United States and Iran, which
could lead to supply disruptions, helped limit losses.
The prospect that the Organization of the Petroleum
Exporting Countries and its allies will continue its output cut
pact later in the year was also supportive.
Saudi Arabia, OPEC's de facto leader, said it was committed
to a balanced and sustainable oil market.
U.S. bank Morgan Stanley said it expected Brent prices to
trade in a $75-$80 per barrel range in the second-half of this
year, pushed up by tight supply and demand fundamentals.