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Oil halts rising streak as US stockpiles seen worsening glut

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Oil fell for the first time in four days before US government data forecast to show crude inventories increased further last week from a record level.

[MELBOURNE] Oil fell for the first time in four days before US government data forecast to show crude inventories increased further last week from a record level.

Futures dropped as much as 0.9 per cent in New York. Stockpiles probably gained by 3 million barrels through Feb 13, according to a Bloomberg News survey of analysts before an Energy Information Administration report on Thursday. Supplies climbed the prior five weeks to 417.9 million, the most in records dating back to August 1982. US oil workers are threatening to expand a nationwide strike to a California port.

Rising US supplies are contributing to a global glut that drove prices almost 50 per cent lower in 2014. Record growth in the nation's shale production will slow in the coming years as the pace at which wells are exhausted accelerates, helping to normalize the market, BP Plc predicted.

"The EIA number is likely to be one that influences sentiment," Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. "There are increasing signs that the oil price is starting to find a base."

West Texas Intermediate for March delivery declined as much as 49 cents to US$53.04 a barrel in electronic trading on the New York Mercantile Exchange and was at US$53.27 at 12:51 pm Singapore time. The contract closed at US$53.53 on Tuesday, up 75 cents from Friday at the highest settlement since Dec 30. The volume of all futures traded was about 46 per cent below the 100-day average.

Brent for April settlement was 28 cents lower at US$62.25 a barrel on the London-based ICE Futures Europe exchange. It advanced US$1.13 to US$62.53 on Tuesday. The European benchmark crude traded at a premium of US$8.20 to WTI for the same month.

Crude stockpiles in the US, the world's biggest oil consumer, have surged to about 18 per cent above the five-year average level for this time of year, according to EIA data. Production climbed to 9.23 million barrels a day through Feb 6, the most in weekly data compiled by the Energy Department's statistical arm since January 1983.

United Steelworkers members who help run oil terminals at the Port of Long Beach that supply refineries in the Los Angeles area are threatening to join an oil workers' strike as they negotiate their own labour contract with Tesoro Logistics LP, said Dave Campbell, the secretary-treasurer of the union local. Since Feb 1, the union has walked out of nine plants that account for 13 per cent of the country's fuel capacity.

BLOOMBERG