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By Bloomberg

Oil traded near $60 a barrel in New York after the biggest monthly advance since May 2009 as shrinking inventories at the U.S. storage hub and cutbacks in drilling prompted speculation the supply glut will abate.

Futures were little changed in New York after capping a 25 percent increase in April. Crude stockpiles at Cushing, Oklahoma, the biggest U.S. oil-storage hub, last week shrank for the first time since November, according to government data. Producers are taking advantage of the price surge by selling more of their future output, threatening to slow the recovery.

Oil has rebounded from a six-year low reached in March as U.S. drillers cut the number of operations oil rigs to the fewest since 2010, adding to signs that the surplus may decline. U.S. crude stockpiles are still at the highest in 85 years, raising speculation the rally may falter.

“Stabilization in U.S. oil output and increased processing rates have helped slow down the rate of increase of stocks in the U.S. and in fact led to a drop in stocks at Cushing, which has helped support prices,” Abhishek Deshpande, an analyst at Natixis SA, said by e-mail from London.

West Texas Intermediate for June delivery traded at $59.58 a barrel in electronic trading on the New York Mercantile Exchange, down 5 cents, at 9:09 a.m. London time. The contract earlier rose as much as 27 cents to $59.90 a barrel. The volume of all futures traded was 67 percent below at the 100-day average for the time of day. Prices are up 12 percent this year.

U.S. Stockpiles

Brent for June settlement was 17 cents lower at $66.61 a barrel on the London-based ICE Futures Europe exchange. The contract rose 21 percent in April, also the most since May 2009. The European benchmark crude was at a premium of $7 to WTI, compared with $8.13 on April 24.

Companies from Whiting Petroleum Corp. to WPX Energy Inc. are hedging more output to lock in sales at higher prices. WTI rising to $65 a barrel for an extended period might add an extra 500,000 barrels a day by the end of next year, according to Bloomberg Intelligence.

Supplies at Cushing, the delivery point for WTI contracts, fell by 514,000 barrels to 61.7 million last week, the Energy Information Administration said Wednesday. Total U.S. crude inventories rose to 490.9 million, according to the Energy Department’s statistical arm. That’s the highest level since 1930 based on monthly records dating back to 1920.

The Organization of Petroleum Exporting Countries pumped 31.295 million barrels a day in April, little changed from March and near the highest level since November 2012, according to data compiled by Bloomberg. Saudi Arabian output remained at 10 million barrels a day for a second month.

“The market appears to be happy enough with steady production levels and the reduction in inventory,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “It’s likely that the gains that we’ve seen might be getting close to an end point. Oil will probably find it difficult to sustain values much beyond the mid $60s.”