Oil prices on Wednesday, January 4, climbed on expectations that U.S. crude inventories have dropped and on signs that the world’s top oil exporters will stick to agreed output cuts that took effect this week.
Global benchmark Brent crude futures LCOc1 rose 28 cents to $55.75 a barrel, a 0.5 percent gain by 10:51 a.m. Eastern. U.S. West Texas Intermediate crude futures CLc1 gained 25 cents, or 0.5 percent, at $52.58 a barrel, Reuters reports.
Both benchmarks recovered some losses from the previous day – when the U.S.-dollar .DXY hit a 14-year peak and knocked oil from 18-month highs – as the greenback dipped on Wednesday, making dollar-denominated fuel purchases in other currencies cheaper. [/USD]
Weekly U.S. industry and government reports are expected to show a 1.7 million-barrel crude draw for last week, analysts polled by Reuters said ahead of the data due late Wednesday and on Thursday. [EIA/S]
“We are expecting a draw,” said Tariq Zahir, managing member of Tyche Capital Advisors in New York.
Oil companies likely drew down inventories in the final week of the year for tax-related reasons, which could lead prices to spike after inventory data is released.
OPEC member Kuwait also lifted expectations that producers will comply with a deal to reduce oversupply after its state-owned oil producer said on Wednesday it would cut output in the first quarter.
Members of the Organisation of the Petroleum Exporting Countries in November agreed their first output cut since 2008 in an attempt to stabilise oil prices.
