By Grant Smith and Angela Macdonald-Smith Dec. 20 (Bloomberg) -- Crude oil rose for a second day after a government report showed U.S. inventories declined more than expected last week. Stockpiles fell 7.59 million barrels to 296.9 million barrels last week, the lowest since February 2005, the Energy Department said. A decline of 1.5 million was expected, according to a Bloomberg News survey. Imports fell after bad weather shut the Houston Ship Channel, which serves the largest U.S. oil port, for about 78 hours last week. ``The draw in crude stocks yesterday was much larger than expected, caused by the ice and storms last week, hence the move higher in price,'' said Steve Raker, an independent oil trader based in London. Crude oil for February delivery rose as much as 74 cents, or 0.8 percent, to $91.98 a barrel, on the New York Mercantile Exchange. The contract traded at $91.81 at 9:35 a.m. in London. Yesterday, it rose 1.3 percent, to $91.24. Futures touched $99.29 on Nov. 21, the highest since trading began in 1983. Prices are 44 percent higher than a year ago. The Houston Ship Channel had a further shutdown caused by fog yesterday, lasting more than five hours. ``We're heading into the winter season, demand is steady and imports were down, that's the primary reason for the draw in the stocks right now,'' Rayola Dougher, an economist at the American Petroleum Institute, said in an interview. ``It's going to be critical as we move into this winter season just what kind of winter we're going to have.'' Brent Oil Brent crude for February settlement traded at $91.97, up 49 cents, on London's ICE Futures Europe exchange at 9:36 a.m. in Singapore. The contract yesterday gained $1.36, or 1.5 percent, to $91.48 a barrel. Inventories on the Gulf of Mexico coast, known as PADD 3, fell 5.84 million barrels to 152.8 million barrels, the Department of Energy report showed. Nationwide imports fell 952,000 barrels to 9.11 million barrels, the lowest since the week ended Oct. 19. ``People realize that this is related to Houston,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``This is probably a one-week drop, leaving the longer-term picture unchanged. We still expect to see rising OPEC output and there are uncertainties about demand growth.'' The 13 members of the Organization of Petroleum Exporting Countries will probably supply 32.5 million barrels a day in December, up from 31.6 million estimated for November, Conrad Gerber, the president of Geneva-based consultant PetroLogistics Ltd., said on Dec. 17. U.S. Energy Secretary Samuel Bodman said yesterday he will go to the Middle East next month to make the case with leaders of oil-rich countries that the world needs more supplies. World oil inventories are below the five-year average and ``that calls for an increase in supply from OPEC and non-OPEC members,'' Bodman said in an interview. -- With reporting by Manash Goswami in New Delhi. Editors: Will Kennedy, john Buckley. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net Last Updated: December 20, 2007 04:37 EST
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