NEW YORK (Bloomberg) -- Oil pared gains after a government report showed U.S. crude inventories advanced to an 86-year high as imports surged.

 

Crude stockpiles rose 2.15 MMbbl to 504.1 MMbbl last week, according to the Energy Information Administration. Imports climbed 11%, the biggest gain since April. Prices climbed earlier as Iran cautiously supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels.

 

"We have ample crude stockpiles and are still accumulating more," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "The main cause of the inventory gain was the rebound in imports from the low level of the prior week."

 

Oil is down about 17% this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December and U.S. crude inventories swelled. Iranian Oil Minister Bijan Namdar Zanganeh didn’t say if the country, the second-biggest OPEC producer before sanctions were intensified in 2012, would deviate from plans to boost exports after the lifting of restrictions last month.

 

West Texas Intermediate for March delivery traded 40 cents, or 1.3%, higher at $31.06/bbl as of 12:30 p.m. on the New York Mercantile Exchange. The contract advanced as much as $1.32 to $31.98 earlier. Total volume traded was 28% above the 100-day average.

 

Brent for April settlement increased 17 cents, or 0.5%, to $34.67/bbl on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $1.46 premium to WTI for April delivery.

 

Cushing Record

 

Supplies at Cushing, Oklahoma, the biggest U.S. oil-storage hub, rose to a record 64.7 MMbbl. The site, which is the delivery point for WTI, has a working capacity of 73 MMbbl, according to the EIA.

 

U.S. crude production fell by 51,000 bpd to 9.14 MMbpd, the lowest since October. Rigs targeting oil in the nation’s fields fell to 439 last week, the lowest since January 2010, Baker Hughes Inc. said on its website Feb. 12.

 

"The key here is that we are starting to see a fall in production and it’s going to continue week-to-week," said Rob Thummel, a managing director and portfolio manager at Tortoise Capital Advisors LLC who helps manage $13.5 billion. "The theme of the earning calls has been the cutting of production forecasts."