* Rising coronavirus cases reduce U.S. summer fuel consumption
* U.S. crude inventories rise by 4.9 million barrels
* Deterioration in Washington-Beijing relations adds pressure
By Naveen Thukral
SINGAPORE, July 23 (Reuters) - Oil prices lost more ground on Thursday, with the market weighed down by a surprise increase in U.S. crude oil reserves as the coronavirus pandemic hits fuel consumption.
U.S. crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the Energy Information Administration said on Wednesday, as a sharp rise in coronavirus cases has started to hit U.S. consumption.
Brent crude LCOc1 fell 4 cents, or 0.1%, to $44.25 a barrel by 0026 GMT while U.S. West Texas Intermediate (WTI) crude CLc1 slid 6 cents, or 0.1%, to $41.84 a barrel.
"Normally inventories of fuel would be heavily drawn upon, but the surge in COVID-19 case numbers has stymied the recovery," ANZ said, referring to usual demand during the peak U.S. summer driving season.
Crude inventories USOILC=ECI rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day, up by 100,000 barrels per day. United States reported more than 1,000 deaths from COVID-19 on Tuesday, according to a Reuters tally, marking the first time since June 10 the nation has surpassed that grim milestone, as California closed in on passing New York in total infections. Donald Trump said the outbreak would probably worsen before it got better, a shift from his previously robust emphasis on reopening the economy.
A fresh dispute between Washington and Beijing put further pressure on prices.
The United States gave China 72 hours to close its consulate in Houston amid accusations of spying, marking a dramatic deterioration in relations between the world's two biggest economies. data from Japan, the world's fourth-largest oil consumer, also weighed on prices. Factory activity contracted for a 15th straight month in July, indicating that lower economic activity due to the pandemic is extending into the third quarter. oil market is likely to take direction from consumer confidence data expected from Europe later in the day.