Oil Pares Gains After Rallying Yesterday on U.S. Inventory Drop

Dec. 24 (Bloomberg) -- Oil traded little changed after a government report yesterday showed a larger-than-expected decline in U.S. stockpiles, signaling a recovery in fuel demand in the world’s largest energy consumer.

U.S. crude inventories fell for a third straight week, dropping to the lowest level since January, according to yesterday’s report.

“The inventory report was a key catalyst for the market,” said Paul Harris, head of natural resources risk management at the Bank of Ireland in Dublin. “That moved the market sharply.”

Crude oil for February delivery fell 17 cents, or 0.2 percent, to $76.50 a barrel in electronic trading on the New York Mercantile Exchange as of 1:27 p.m. London time. It earlier traded as high as $77.48 a barrel, the highest intraday price since Dec. 4. There will be no trading tomorrow on Christmas Day, or on Jan. 1 for New Year’s Day.

Pumping has restarted through Iraq’s 450,000 barrel-a-day oil export pipeline to Turkey after an explosion forced its closure on Dec. 20, Turkey’s Energy Ministry said.

Volume through the link should return to normal in a few days, a ministry official in Ankara said today, speaking on condition of anonymity.

U.S. crude stockpiles had the biggest one-week decline since September as supplies fell 4.84 million barrels to 327.5 million, more than the 1.6 million barrels forecast in a Bloomberg survey before the report.

Oil has gained 73 percent this year, poised for its biggest yearly gain in a decade.

Brent crude oil for February settlement fell 35 cents, or 0.5 percent, to $75.10 at 1:26 p.m. on the London-based ICE Futures Europe exchange. Yesterday, it rose $1.99 to end the session at $75.45 a barrel, the highest close since Dec. 7.