Oil Trades Near $73 After Rising on Declines in U.S. Supplies

Dec. 17 (Bloomberg) -- Oil traded near $73 a barrel in New York after rising the most in a month as a government report showed a decline in crude and distillate supplies in the U.S., the world’s biggest energy consumer.

Oil rose 2.8 percent yesterday after the Energy Department said crude inventories declined last week to the lowest since Jan. 9. Distillate stocks, a category that includes heating oil and diesel, fell 2.95 million barrels to 164.4 million. Prices also gained as Iran tested a medium-range missile, drawing condemnation from the U.S. and U.K.

“It was distillate that charged the way,” said Richard A. Ilczyszyn, a senior market strategist with Lind-Waldock & Co. in Chicago. “The inventories were the icing on the cake” in a market poised to rally after falling to a two-month low this week, he said.

Crude oil for January delivery traded at $72.85 a barrel, up 19 cents, in electronic trading on the New York Mercantile Exchange at 10:18 a.m. Sydney time. Yesterday, the contract rose $1.97 to $72.66. Futures dropped as low as $68.59 this week, the lowest point in a nine-day decline.

Supplies of crude oil fell 3.69 million barrels last week to 332.4 million. They were expected to decline by 2 million barrels, according to the median of 17 estimates in a Bloomberg News survey.

Oil climbed on “reduced stockpiles in the U.S. and geopolitical concerns in the Middle East,” David Taylor, a market analyst at CMC Markets in Sydney, said in a research note.

Iranian Missile

The test of the upgraded Sejil-2 surface-to-surface missile “does make the case for us moving further on sanctions,” U.K. Prime Minister Gordon Brown said. Mike Hammer, spokesman for President Barack Obama, called the test worrying and said it would reinforce the concerns of the international community.

Imports of crude oil in the U.S. declined 365,000 barrels to 7.77 million barrels a day, the Energy Department report showed. It was the lowest since September 2008, when ports were shut because of hurricanes Gustav and Ike.

Refineries operated at 80 percent of capacity last week, down 1.1 percentage points from the prior week, the report showed. Analysts surveyed by Bloomberg News forecast a 0.3- percentage-point gain.

Gasoline inventories gained 879,000 barrels to 217.2 million barrels last week. They were forecast to rise 1.25 million barrels, based on the median estimate of 18 analysts in the Bloomberg survey.

Brent crude for January settlement rose $1.50, or 2.1 percent, to settle at $73.55 a barrel on the London-based ICE Futures Europe exchange. The contract expired yesterday. The more widely traded February contract gained $1.42, or 1.9 percent, to $74.29 a barrel.