By Margot Habiby Dec. 16 (Bloomberg) -- Crude oil futures extended gains after a U.S. government report showed a larger-than-forecast decline in inventories. Supplies dropped 3.69 million barrels to 332.4 million in the week ended Dec. 11, the Energy Department said today in a weekly report. Inventories were forecast to drop by 2 million barrels, according to the median of analyst estimates in a Bloomberg News survey. Crude oil for January delivery rose $2.13, or 3 percent, to $72.82 a barrel at 10:37 a.m. on the New York Mercantile Exchange. Oil traded at $71.71 a barrel before the release of the report at 10:30 a.m. in Washington. Futures also rose as Iran successfully tested a medium- range missile, drawing threats of sanctions against OPEC’s second-largest oil producer. The Obama administration said Iran’s test of the upgraded Sejil-2 surface-to-surface missile undermines the country’s claim of peaceful intentions. U.K. Prime Minister Gordon Brown said the move “does make the case for us moving further on sanctions.” Oil also advanced amid expectations U.S. Federal Reserve policy makers meeting today will hold interest rates near a record low to support economic growth. The Federal Open Market Committee gathers as growth in the final quarter of 2009 accelerates to more than 4 percent, the fastest pace in almost four years, according to analysts’ forecasts. The FOMC will probably discuss how to eventually withdraw unprecedented programs to revive credit, including purchases of $1.43 trillion in housing debt, economists said. Gasoline Demand U.S. gasoline consumption rose 1.5 percent in November from a year earlier as the economy recovers from the recession, the American Petroleum Institute said today. The dollar fell as much as 0.4 percent against the euro, boosting commodities as an alternative investment. The U.S. currency was trading at $1.4582 per euro at 10:42 a.m. in New York, compared with $1.4538 yesterday. U.K. unemployment unexpectedly fell for the first time since February 2008, adding to signs the economy is emerging from its deepest recession in at least three decades. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

Source