Crude oil fell from a four-week high in New York on speculation above average U.S. fuel stockpiles are sufficient to meeting rising demand in the nation's economy.

Oil surged above $58 a barrel yesterday after a report showed the U.S. economy, the world's biggest oil consumer, expanded at a faster-than-forecast annual pace of 3.5 percent last quarter. Fuel demand rose for a third week as cold weather in the Northeast drew down U.S. distillate supplies for the first week in seven, the Energy Department reported.

``There were some solid draws from the distillates stocks which is what you'd expect'' given the weather, said Chris Mennis, owner of oil broker New Wave Energy LLC in Aptos, California. ``But gasoline and crude were all up.''

Crude oil for March delivery fell as much as 31 cents, or 0.5 percent, to $57.83 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $57.85 at 10:21 a.m. in Sydney.

The contract rose $1.17, or 2.1 percent, to $58.14 yesterday, the highest close since Jan. 3. Prices, which initially fell on bigger than forecast gains in U.S. oil and gasoline stockpiles, jumped almost $1 in 15 minutes after the U.S. Federal Reserve cited firmer economic growth in six-weekly review of interest rates.

``There was a lot of doom and gloom about the economy and concern that energy demand would fall,'' Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts, said yesterday. ``That's now evaporating.''

Stockpiles, Demand

Oil jumped 7.6 percent in the past two sessions, the biggest two-day increase since December 14 and 15, 2004 when gains were spurred by below-normal temperatures and falling stockpiles.

Yesterday's report showed U.S. oil stockpiles hold 324.9 million barrels, 10 percent above the five-year average for the period, while gasoline supplies rose a seventh straight week.

Fuel consumption grew 2.5 percent to 20.9 million barrels a day last week, with demand up for every category measured with the exception of propane. Distillate demand jumped 10.5 percent to 4.5 million barrels a day.

``I'm not really confident of the market direction one way or the other,'' New Wave's Mennis said. ``And I was a pretty confident bear this week.''

Heating oil for March delivery was at $1.6720 a gallon in after-hours trading, after rising 2.3 percent to $1.6838 yesterday. The February contract, which expired yesterday, rose 1 percent to $1.6546.

Heating Season

Distillate supplies, including heating oil and diesel, fell by 2.65 million barrels to 140 million last week, leaving them 9.1 percent above the five-year average, the department said.

Heating demand in the U.S. Northeast will be 21 percent above normal through Feb. 7, forecaster Weather Derivatives said. Temperatures in the region may remain below normal through Feb. 14, the National Weather Service said yesterday.

``The heating season is effectively over,'' Eugene X. Hodge, who manages a $4.3 billion oil and gas company bond portfolio at John Hancock Financial Services Inc. in Boston, said yesterday. ``Attention is shifting to gasoline and the driving season a few months ahead.''

Reformulated gasoline for March delivery rose 0.1 percent to $1.5524 yesterday. The February contract, which expired yesterday, fell 1.3 percent to $1.5009.

Gasoline inventories surged 3.82 million barrels to 224.6 million last week, twice the gain forecast in a Bloomberg survey of analysts. Stockpiles have risen 12 percent in seven straight weekly gains and are 3.9 percent above the five-year average for the period, the department said.

Gasoline demand rose 0.9 percent from a 10-month low to 9.09 million barrels a day last week. Consumption the past four weeks averaged 9.1 million barrels a day, 3.4 percent more than the same period a year ago, the department said. U.S. gasoline demand peaks between the Memorial Day holiday in late May and Labor Day in early September.

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By Gavin Evans

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net

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