Oil prices edge up on expected US crude inventory draw

SINGAPORE: Oil prices nudged higher on Wednesday on expectations of a U.S. crude inventory draw, although trading activity was muted as markets start to wind down ahead of the Christmas weekend.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $53.56 per barrel at 0634 GMT, up 26 cents from their last settlement.

International Brent crude oil futures were at $55.57 a barrel, up 22 cents.

Traders said the higher prices were largely due to an expected reduction in U.S. crude oil inventories, which will be reported late on Wednesday.

Jeffrey Halley, analyst at futures OANDA in Singapore said U.S. crude stocks were expected to fall by 2.563 million barrels.

In the absence of strong fundamentals, traders said that technical support and resistance levels would become price drivers.

"U.S. oil may rise to $54.37 per barrel, as it has broken resistance at $53.36," said Reuters technical commodities analyst Wang Tao.

"Brent oil is poised to break a resistance at $55.79 per barrel," he said.

Into next year, French bank Societe Generale said in its December oil market outlook that the agreement between the Organization of the Petroleum Exporting Countries (OPEC) and other leading oil producers such as Russia to cut production by almost 1.8 million barrels per day (bpd) from January 2017 "should push crude prices from the $40-50 range in 2016 to the $50-60 range in 2017."

The relatively low price expectations for 2017 come as oil markets are expected to remain well supplied despite the planned output cuts.

Taking advantage of plentiful and relatively cheap crude, refiners especially in Asia are churning out more fuel than the market can absorb.

China exported 1.47 million tonnes of diesel in November, up 61.8 percent from the same month a year earlier, customs data showed on Wednesday, as even fuel thirsty China struggles to cope with the output from its refiners.

Gasoline exports rose 64.6 percent in November to 940,000 tonnes.