Oil prices edged higher on Tuesday on forecasts of a steep draw in U.S. crude oil stocks that could indicate a global oversupply is starting to shrink.
Benchmark Brent crude oil futures LCOc1 were trading up 54 cents at $55.46 a barrel at 1124 GMT. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were up 23 cents at $52.35 per barrel.
Analysts polled by Reuters expected weekly U.S. crude oil inventories to show a draw of 2.4 million barrels in the week ending Dec. 16. [EIA/S]
Stocks fell more than expected in data published last week, lifting expectations for another large fall in this week’s data.
A landmark deal to cut global supply among OPEC and non-OPEC producers struck earlier this month has lifted oil prices to 17-month highs.
Russian energy minister Alexander Novak told Russian newspaper Vedomosti that Russia may extend a production cut beyond the first half of the year if needed.
“We are in a wait-and-see mood after OPEC-newsflow caused much volatility,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg. “The new balance seems to be between $53 and $57 a barrel on Brent for the next weeks.”
Asia is seen posting its biggest net refining capacity additions in three years in 2017, further boosting demand for crude in the world’s biggest and fastest growing oil consuming region.
The increase amounts to about an additional 1.5 percent of refining capacity on top of Asia’s total installed capacity of nearly 29 million bpd.
Still, traders see no outright supply shortage for Asian refineries, as OPEC is shielding most of its Asian customers from the planned cuts.