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Oil erases gains as US inventories slide for eighth week

[NEW YORK] Oil erased gains as a government report showed that US inventories fell an eighth week, the longest stretch of declines since early 2008.

Supplies declined 4.93 million barrels last week, the Energy Information Administration said on Wednesday. Analysts surveyed by Bloomberg had expected a drop of 2 million. US President Barack Obama has scope to extend talks with Iran that could ease sanctions on the nation's oil trade beyond a June 30 deadline, the State Department signaled.

West Texas Intermediate for August delivery fell 14 cents to US$60.87 a barrel at 10:33 am on the New York Mercantile Exchange. Total volume was 27 percent below the 100-day average for the time of day.

Brent for August settlement fell 32 cents to US$64.13 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of US$3.36 to WTI.

US crude inventories slid to 463 million barrels through June 19, EIA data showed. Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, fell 1.87 million.

An extension of nuclear talks with Iran by days, or longer, seems increasingly likely as world powers involved have signaled doubt about their ability to resolve all the issues in the next week. International sanctions imposed in 2012 to contain Iran's nuclear activity have cut its oil exports by about 50 per cent.

Iran's Supreme Leader Ayatollah Ali Khamenei ruled out a decade-long freeze on the nation's nuclear program on Tuesday. International inspections of military sites and restrictions on Iranian nuclear work aren't acceptable, he said in an address to senior government and military officials, according to the official Islamic Republic News Agency.

Iran has estimated it could double oil exports from about 1 million barrels a day within six months of sanctions being lifted. Getting the right nuclear deal is "better than the deadline itself," according to John Kirby, the US State Department's spokesman.

US explorers have idled drilling rigs for 28 consecutive weeks, extending a record slide. Machines targeting oil fell to 631, the fewest since August 2010, according to data from Baker Hughes Inc, an oilfield-services company.