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Oil falls amid ample US supply, Iraqi shipments

[NEW YORK] Oil declined for a second day on speculation that a global crude supply glut will grow.

Prices retreated after failing to breach US$60 a barrel in New York for a third day. Iraq exported the most oil in more than three decades last month, Asim Jihad, a spokesman for the Oil Ministry, said by text message on Friday. US crude inventories are still at their highest level in 85 years even after the nation's biggest storage hub reported a decline in stockpiles last week.

Trading volume was reduced because of the May Day holiday in the UK. The size of market moves can be erratic when the number of contracts traded declines. Oil in New York climbed 25 per cent in April, the biggest monthly advance since May 2009 amid speculation that a drop in the number of US drilling rigs will reduce stockpiles.

"I'm at a loss to explain how oil has held up as well as it has," Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees US$3.4 billion, said by phone. "The market has been defying gravity. The fundamentals aren't supportive." West Texas Intermediate for June delivery fell 23 cents, or 0.4 per cent, to US$58.92 a barrel at 11.25 am on the New York Mercantile Exchange. Prices touched US$59.90 on May 1, the highest level since Dec 11. Volume was 47 per cent below the 100-day average for the time of day.

Brent for June settlement slipped 13 cents to US$66.33 a barrel on the London-based ICE Futures Europe exchange. It reached US$67.10 earlier, the highest since Dec 8. Volume was down 65 per cent from the 100-day average. The European benchmark crude traded at a US$8.18 premium to WTI.