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Oil declines as US stockpile gains counter Nigeria disruption

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Oil declined as rising US crude stockpiles countered supply disruptions in Nigeria, Africa's second-biggest producer.

[HONG KONG] Oil declined as rising US crude stockpiles countered supply disruptions in Nigeria, Africa's second-biggest producer.

Futures slid as much as 0.7 per cent in New York after advancing 2.8 per cent Tuesday.

US inventories increased by 3.45 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles expanded from the highest level since 1929.

Royal Dutch Shell Plc and Chevron Corp are evacuating workers from the Niger Delta because of deteriorating security, a union official said.

Oil has rebounded after slumping earlier this year to the lowest level since 2003 on signs the global gut is easing as US output declines. Producers in Canada including Shell and ConocoPhillips are beginning the process of restarting operations after the easing of wildfires that curbed supply.

"The impact of supply disruptions at the moment is a lot less given the very large stockpiles and supply surplus, but if we were to see a prolonged outage then it would help to redress the significant increase we saw in Iranian and Iraqi production last month," Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone.

"The market has rallied quite a long way amid the US production cuts."

West Texas Intermediate for June delivery fell as much as 32 US cents to US$44.34 a barrel on the New York Mercantile Exchange and was at US$44.45 at 12:59 pm Hong Kong time.

The contract gained US$1.22 to close at US$44.66 on Tuesday, paring its 2.7 per cent loss the previous session. Total volume traded was about 34 per cent below the 100-day average. Prices have gained about 70 per cent from a low in February.

Brent for July settlement lost as much as 29 US cents, or 0.6 per cent, to US$45.23 a barrel on the London-based ICE Futures Europe exchange. The contract climbed US$1.89 to US$45.52 on Tuesday. The global benchmark crude was at a premium of 22 US cents to WTI for July.

Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased by 1.46 million barrels last week, the API said Tuesday, according to a person familiar with the figures.

Nationwide stockpiles probably expanded by 750,000 barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report.

BLOOMBERG