Question: Let's say I am staing at a hostel and there is only one electric kettle. I need to to boil some water to cook a meal. So I take it fill it up and turn it on. To cook a meal I need all the water. It boils, but then another person comes up and take the kettle not knowing that I am the person who filled it up and that I need all the water. So does the use of *occupy* sound natural in the following sentence?

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> I am sorry, but I **occupied** the kettle first.
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> 
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I am almost sure that the sentence doesn't sound natural, but I have no clue what a native English speaker would say to communicate the meaning.

Answer: 
You're correct, a fluent speaker would not use "occupy" here.

The most natural thing to say would be, "Excuse me, I'm using that." Depending on how forceful or polite you want to be and what rights you have to the kettle versus the other person, it might be, "Hey, that's my kettle! Get your hands off!", or at the opposite end, "Excuse me, I just boiled that water, I need that. I'll start another pot for you." Etc.
I would simply say:

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> Oh, sorry, that's my water[ - I need it all].
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> 
> 

If someone challenges your "ownership" of it, you could then say something like:

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> I [just] boiled it.
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> 
> 

Or, more forcefully, for emphasis:

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> I'm the one who boiled it.
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> 
> 

The above is maybe a bit aggressive though - in almost all cases (i.e. in polite society) you'd be fine with just my first suggestion.