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By Bloomberg

Oil extended its advance to trade above $61 a barrel on signs the U.S. supply glut is easing.

Futures gained as much as 2.1 percent in New York, rising from the highest close since December. Crude inventories fell by 1.5 million barrels through May 1, the first drop in industry data in eight weeks, the American Petroleum Institute was said to have reported Tuesday. An increase of 1.5 million is forecast in a Bloomberg survey before a government report Wednesday.

Oil is recovering from a six-year low in March as U.S. companies reduced the number of active rigs to the fewest since September 2010, bolstering speculation that output will slow. The rally may still falter, with crude stockpiles at the highest level in 85 years and shale-oil producers including EOG Resources Inc. preparing to boost drilling as prices rebound.

“Producers are starting to respond in terms of supply and we’re seeing that with the shale rigs,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “Oil at $60 is a big level and I expect it to spend some time around here. The move is generally bullish and it should be supported.”

West Texas Intermediate for June delivery climbed as much as $1.29 to $61.69 a barrel in electronic trading on the New York Mercantile Exchange and was at $61.41 at 12:30 p.m. Singapore time. The contract advanced $1.47 to $60.40 on Tuesday, the highest close since Dec. 10. The volume of all futures traded was about 2 percent above the 100-day average. Prices have gained 15 percent this year.

Cushing Stockpiles

Brent for June settlement rose as much as $1.01, or 1.5 percent, to $68.53 a barrel on the London-based ICE Futures Europe exchange. It climbed $1.07 to $67.52 on Tuesday, the highest close since Dec. 5. The European benchmark crude traded at a premium of $6.92 to WTI.

Crude inventories in the U.S., the world’s largest oil consumer, have expanded for 16 weeks through April 24 to 490.9 million barrels, data from the Energy Information Administration showed. That’s the highest level since 1930, based on monthly records from the Energy Department’s statistical arm dating back to 1920.

Supplies at Cushing, Oklahoma, the delivery point for WTI contracts and the nation’s biggest oil-storage hub, declined by 336,000 barrels last week, the API in Washington reported, according to ForexLive.

The industry group collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that data be filed with the EIA for its weekly survey.

U.S. Drilling

EOG Chairman and Chief Executive Officer William Thomas said Tuesday his company will increase drilling as soon as the market stabilizes at $65 a barrel. Pioneer Natural Resources Co. plans to add drilling rigs from July, subject to oil price movements and the sale of assets.

Drillers seeking oil in the U.S. cut the number of active machines by 24 to 679 in the week ended May 1, according to Baker Hughes Inc., an oilfield-services company. The rig count has slid 57 percent since the start of December.

Saudi Arabia, the world’s largest crude exporter, kept pricing of its main Arab Light unchanged for June sales to Asia. The grade will sell at 60 cents a barrel below a regional benchmark next month, state-owned Saudi Arabian Oil Co. said in an e-mailed statement Tuesday. Iran is also forecast to maintain its discount for Light crude, according to a quarterly formula.

The 14-day relative strength index for both WTI and Brent have climbed to more than 70, the highest readings since June, data compiled by Bloomberg showed. Investors typically sell contracts above that level as it indicates a market has risen too quickly to sustain further gains.