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By Bloomberg

Oil held gains after advancing the most in two weeks as declining U.S. crude stockpiles added to signs a supply glut is easing.

Futures were little changed in New York after rising 2.2 percent Tuesday. Inventories fell by 3.2 million barrels in the week ended June 19, the industry-funded American Petroleum Institute was said to have reported. A drop of 2 million is forecast in a Bloomberg survey of analysts before government data Wednesday. OPEC expects prices to climb in the fourth quarter as stockpiles deplete, Kuwait’s Oil Minister Ali al- Omair said.

Oil is sustaining a rebound from a six-year low amid speculation a prolonged retreat in drilling will slow U.S. production and reduce a surplus. Crude inventories in the world’s biggest consumer are still almost 90 million barrels above the five-year average for this time of the year, according to the Energy Information Administration.

“A drop in API crude supply is setting the stage for a strong rally,” Phil Flynn, a senior market analyst at Price Futures Group in Chicago, said by e-mail. “Fears over Greece were replaced with rising demand expectations,” he said of a potential debt default.

West Texas Intermediate for August delivery was at $61 a barrel in electronic trading on the New York Mercantile Exchange, down 1 cent, at 1 p.m. Singapore time. The contract increased the past two days to close at $61.01 on Tuesday. Total volume was about 73 percent below the 100-day average. Prices have advanced more than 14 percent this year.

U.S. Supplies

Brent for August settlement was 4 cents lower at $64.41 a barrel on the London-based ICE Futures Europe exchange. It climbed $1.11 to $64.45 on Tuesday. The European benchmark crude traded at a premium of $3.40 to WTI.

U.S. crude inventories shrank to 467.9 million barrels in the week to June 12, EIA data showed. Production averaged 9.59 million a day, near the fastest pace in weekly records compiled by the Energy Department’s statistical arm since January 1983.

Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s largest oil-storage hub, decreased by 2 million barrels through June 19, the API in Washington reported, according to ForexLive.

U.S. explorers have idled drilling rigs for 28 straight weeks, extending a record slide. Machines targeting oil fell to 631, the fewest since August 2010, based on data from Baker Hughes Inc., an oilfield-services company.

Nuclear Deal

The declining rig count and reduced stockpiles will boost prices later this year, Kuwait News Agency reported, citing Oil Minister al-Omair. Kuwait is the fourth-largest producer in the Organization of Petroleum Exporting Countries.

In Iran, Supreme Leader Ayatollah Ali Khamenei ruled out a decade-long freeze on the nation’s nuclear program days before a June 30 deadline for an agreement with world powers. International inspections of military sites and restrictions on Iranian nuclear work aren’t acceptable, he said in an address to senior government and military officials, according to the Islamic Republic News Agency.

Iran has estimated it could double oil exports from about 1 million barrels a day within six months of sanctions being lifted. Getting the right nuclear deal is “better than the deadline itself,” according to John Kirby, the U.S. State Department’s spokesman.

The Chicago Board Options Exchange Crude Oil Volatility Index closed at 29.69 on Tuesday, signaling the least volatile trading since November.