REUTERS-Oil prices rose for
the first time in three days on Wednesday ahead of the U.S. weekly inventory
data, following news of Saudi supply cuts to Asia.
But, traders said
persistent doubt over output reductions and signs of rising shipments from
other producers kept gains in check.
"We expect some
bullish OPEC rhetoric to ramp up in an attempt to neutralize the bearish vibes
that have emanated from the recent production increases indicated out of Libya,
Iran, Iraq and Nigeria," Jim Ritterbusch, president of Chicago-based energy
advisory firm Ritterbusch & Associates, said in a note.
Analysts forecast
U.S. crude inventories increased by 1.2 million barrels last week, according to
a Reuters poll. [EIA/S] That compared with a build of 1.5 million barrels,
according to data late Tuesday from the American Petroleum Institute, an
industry group. [API/S]
The U.S. Energy
Information Administration (EIA) will release its weekly petroleum status
report at 10:30 a.m. EST on Wednesday.
After both Brent and
U.S. crude futures settled at their lowest levels in a month on Tuesday, Brent
was up 65 cents, or 1.2 percent, at $54.29 a barrel by 10:03 a.m. EST. U.S.
West Texas Intermediate (WTI) rose 56 cents, or 1.1 percent, to $51.38 per
barrel.
At their lows on
Tuesday, both benchmarks surrendered about 40 percent of the gains made between
late November and early January following the Organization of the Petroleum
Exporting Countries' (OPEC) agreement to cut output.
Analysts, however,
said the slide was unlikely to become more aggressive, given the likelihood of
Saudi Arabia and its Gulf neighbors to at least stick to their pledge to cut
output.
"Few envision
that Brent crude at sub-$50 a barrel is a viable price (in the first half of
2017) amid OPEC production cuts tightening up the market," SEB commodities
strategist Bjarne Schieldrop said.
Saudi Arabia, the
world's top oil exporter, has told some of its Asian customers that it will
reduce their crude supplies slightly in February.
But there is still
plenty of oil to fill the gaps left by OPEC. North American drilling is on the
rise, while European and Chinese traders are shipping a record 22 million
barrels of crude from the North Sea and Azerbaijan to Asia this month.
"Traders
continued to fret about rising U.S. supply and compliance by OPEC to agreed-upon
production cuts," ANZ bank said.
U.S. crude
production was projected to rise by 110,000 barrels per day in 2017 to 9
million bpd, according to EIA data.
OPEC's
second-biggest producer Iraq plans to raise crude exports from its southern
port of Basra to an all-time high of 3.641 million bpd in February, keeping
shipments high even as OPEC production cuts take effect this month.
REUTERS
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