NEW YORK, May 19 — Oil extended its decline for a second day as US crude stockpiles unexpectedly increased, keeping supplies at the most in more than eight decades.

Futures slid as much as 1.6 per cent in New York after falling from the highest level in seven months yesterday amid a surging US currency. Inventories increased by 1.3 million barrels last week, according to government data.

Rain in Canada may slow fires that have shifted back toward oil-sands operations. The Bloomberg Dollar Spot Index rose after the Federal Reserve published minutes of its latest monetary policy suggesting a June hike is possible.

Crude has surged more than 80 per cent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as US output declines. Opec’s strategy to defend market share is working, Kuwait’s acting oil minister said in an interview yesterday and the market moved into a deficit earlier than expected, according to Goldman Sachs Group Inc.

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“While the demand-supply outlook has improved, oil has had a very substantial rise and we are getting toward the stage where high inventories and producer hedging are probably likely to cap the rally,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The sharply higher US dollar has seen momentum steady.”

West Texas Intermediate for June delivery, which expires tomorrow, fell as much as 78 cents to US$47.41 (RM193.89) a barrel on the New York Mercantile Exchange and was at $47.52 at 12:05 p.m. Singapore time. Total volume traded was about 12 per cent above the 100-day average. The more-active July contract slid as much as 85 cents to US$47.93.

Crude stockpiles

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Brent for July settlement lost as much as 91 cents, or 1.9 per cent, to US$48.02 a barrel on the London-based ICE Futures Europe exchange. The contract fell 35 cents to US$48.93 yesterday. The global benchmark crude traded at a premium of five cents to WTI for July.

US crude inventories climbed to 541.3 million barrels, near the highest since October 1929, according to the Energy Information Administration. Supplies were projected to decrease by 3.5 million barrels, according to the median estimate of analysts surveyed by Bloomberg. Gasoline consumption was at 9.56 million barrels a day in the four weeks ended May 13, the highest seasonal level in at least a decade, according to the EIA. — Bloomberg