By Alexander Kwiatkowski Dec. 23 (Bloomberg) -- Oil held steady above $74 a barrel in New York before a U.S. Energy Department report likely to show crude stockpiles fell last week as temperatures dropped. The report today is expected to show oil inventories in the U.S., the world’s biggest energy consumer, shrank by 1.6 million barrels in the week ended Dec. 18, according to the median estimate of 16 analysts polled by Bloomberg News. Data from the industry-funded American Petroleum Institute yesterday showed commercially held U.S. inventories fell by 3.71 million barrels. “Due to cold weather, we are seeing stock draws in crude and that is the supporting factor these days,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich. “It brings the inventory levels nearer to the five-year average.” Crude oil for February delivery rose as much as 47 cents, or 0.6 percent, to $74.87 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.83 as of 12:56 p.m. London time. Futures closed yesterday at $74.40, the highest settlement since Dec. 4. There will be no trading on Dec. 25 for Christmas and on Jan. 1 for New Year’s Day. Oil rose yesterday as positive housing data from the U.S. signaled the industry at the center of the recession has stabilized. The National Association of Realtors said November sales of existing homes increased at the highest annual rate since February 2007. Distillates Drop The Energy Department report will be released at 10:30 a.m. in Washington. It will probably show distillate inventories dropped 2 million barrels, according to the Bloomberg survey. Yesterday’s API report signaled distillate supplies, which include heating oil and diesel, slipped 745,000 barrels to 165.1 million. Gasoline stockpiles fell 1.1 million barrels to 215.9 million, the biggest drop in 10 weeks, according to the API. U.S. gasoline demand rose the most in three weeks as drivers in the northeast filled up before a snowstorm, according to MasterCard Inc., the second-biggest credit card company. Motorists bought an average 9.57 million barrels a day of gasoline in the week to Dec. 18, MasterCard said yesterday in its SpendingPulse report. Consumption increased 2.9 percent from the previous week and 1.7 percent from a year earlier. The Organization of Petroleum Exporting Countries agreed at a meeting yesterday in Luanda, Angola, to hold production quotas at 24.845 million barrels a day. The 12-member group, which pumps about 40 percent of the world’s oil, has gathered four times this year without revising official output targets. Call for Compliance Rising oil prices have encouraged some OPEC members to renege on their pledge in 2008 to reduce supply by an overall 4.2 million barrels a day. Secretary-General Abdalla el-Badri said he wants quota compliance to improve to between 75 percent and 80 percent, from about 60 percent. “OPEC is happy with current price ranges of $70 to $80, which provide acceptable income for producers and are acceptable for consumers,” Mike Wittner, head of oil research at Societe Generale SA in London, said in a report. “OPEC needs to start getting more serious about improving compliance and cutting real barrels if they want their strategy for reducing stocks to succeed.” Brent crude oil for February settlement traded up 16 cents at $73.62 a barrel on the London-based ICE Futures Europe exchange at 12:47 p.m. local time. The contract earlier rose as much as 0.7 percent to $73.94. Yesterday, Brent advanced 47 cents, or 0.6 percent, to settle at $73.46 a barrel. To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

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