Feb. 23 (Bloomberg) -- Oil traded little changed in New York after rising to the highest price this year after U.S. fuel inventories plunged and analysts said supplies may be disrupted if Iran is sanctioned again for developing nuclear capabilities.

U.S. stockpiles of distillates, including heating oil and diesel, fell 5 million barrels last week, or 3.8 percent, the biggest drop since September 2005, according to the Energy Department. The U.S. and European nations will meet next week to draft a second sanctions resolution against Iran, the second- largest Organization of Petroleum Exporting Countries producer.

``The main risk to the oil price is either a boycott of trade, isolating Iran, or a military attack,'' because either would ``influence the production and supply of oil from Iran to the world market,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. Distillate inventories ``will influence the price'' until winter ends in the Northern Hemisphere, she said.

Crude oil for April delivery advanced as much as 57 cents, or 0.9 percent, to $61.52 a barrel on the New York Mercantile Exchange and traded at $61.07 at 1:27 p.m. in London. The previous intraday trading high occurred Dec. 26, when oil touched $63.20 in New York.

U.S. oil refineries operated at 85.2 percent of capacity in the week ended Feb. 16, the lowest since March 2006, the Department of Energy said yesterday. Analysts expected refiners to operate at 86.9 percent, according to a Bloomberg News survey.

U.S. gasoline inventories fell 3 million barrels to 222.1 million, the department said. Crude oil jumped 3.7 million barrels to 327.6 million last week, the report showed.

$62-$65 Range

``We did see a much larger draw-down in heating oil and distillate inventories,'' said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. Oil will ``hang around in this $62-$65 range going forward.''

In late February and March, refineries perform maintenance and start making less heating oil and more gasoline in preparation for the summer, when motorists take to the roads.

Gasoline and heating oil inventories have fallen 14 million barrels, or 8 percent, in four weeks, Bentz said.

Brent oil for April settlement rose as much as 82 cents, or 1.4 percent, to $61.44 a barrel on the ICE Futures exchange in London. The contract traded at $61.13 at 1:29 p.m. local time.

UN Deliberations

The five permanent members of the United Nations Security Council plus Germany will gather in London on Feb. 26 to start work on a second resolution for Iran sanctions, Nicholas Burns, U.S. undersecretary of state, said yesterday.

The UN's nuclear watchdog group, the International Atomic Energy Agency, said yesterday that Iran plans to install 3,000 centrifuges designed to produce nuclear fuel at an underground facility in Natanz, south of Tehran, by May.

Oil traders and analysts said that any military attack against Iran may disrupt oil flow in the Strait of Hormuz, a waterway between Iran and Oman at the mouth of the Persian Gulf. Almost a quarter of the world's oil flows through Hormuz.

The Security Council voted unanimously Dec. 23 to impose sanctions on Iran, including a ban on the acquisition of materials that might be used to build nuclear weapons. The UN gave Iran 60 days, which have expired, to halt enrichment, the process by which uranium is made into a form usable in reactors or bombs.

``The price will stay strong in the $60 area for the coming weeks,'' Saltvedt said.

Crude oil surged to a record $78.40 a barrel in New York on July 14 partly because of violence in the Middle East and concern that Iran's defiance of UN nuclear inspectors might disrupt exports. Oil has fallen about 22 percent since, and OPEC has trimmed production twice in response.

Expressed in U.S. dollars, the price of the U.S. benchmark crude, called West Texas Intermediate, has risen about 1 percent in 12 months. Oil has dropped about 8 percent in euros and 10 percent in British pounds. It rose about 4 percent in yen.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

Last Updated: February 23, 2007 08:31 EST