How did shortening the 707 increase its range? According to the Wikipedia entry for the 707-120:


  The 707-138 was a −120 with a fuselage 10 ft (3.0 m) shorter than the others, with 5 ft (1.5 m) (three frames) removed ahead and behind the wing, giving increased range. Maximum takeoff weight was the same 247,000 lb (112,000 kg) as the standard version


With the same MTOM between the -120 and the -138, what made the difference in the range? Was it simply less parasitic drag from the shorter fuselage?

I would presume that the fuel capacity (stored in the wings - center section tanks didn't come about until the -320) would have been the same.

I see notes on the -120B which switched to the P&amp;W JT3D-1 engines which were more fuel efficient. That would account for greater range, but that doesn't apply to the -138 (at least not at launch).
If the fuse was shortened that much (reducing both the weight of the airframe and its cargo-carrying capacity) and the maximum takeoff weight stayed the same, the most natural explanation is that the plane's allowable fuel load at takeoff or the tank's capacity was increased.