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UPDATE 8-Oil rises 2 pct amid expected draw in U.S. crude inventories

Published 05/01/2017, 08:47 am
© Reuters.  UPDATE 8-Oil rises 2 pct amid expected draw in U.S. crude inventories
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* Weekly U.S. crude stocks seen down 2.2 mln barrels - poll

* API says crude stockpiles fell 7.4 mln barrels last week

* U.S. dollar edges down from 14-year high

* Kuwait Petroleum Corp says is committed to output cut

* OPEC deal compliance meeting set for Jan. 21-22 in Vienna

* Saudi expected to lift Asian crude export prices - traders (Adds API stockpile data)

By Jessica Resnick-Ault

NEW YORK, Jan 4 (Reuters) - Oil prices rose nearly 2 percent on Wednesday on expectations 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 99 cents, or 1.8 percent, to settle at $56.46 a barrel. U.S. West Texas Intermediate crude futures CLc1 gained 93 cents to end at $53.26 a barrel, also a 1.8 percent gain.

In post-settlement trade, crude rose slightly after industry group the American Petroleum Institute reported that crude stockpiles fell 7.4 million barrels in the week ended Dec. 30.

Weekly U.S. industry and government reports were expected to show a 2.2 million-barrel crude draw for last week, analysts polled by Reuters. 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 the government's inventory data is released on Thursday at 11 a.m. (1600 GMT).

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

The market continues to try to consolidate below 12-month highs, said Gene McGillian, manager of market research at Tradition Energy.

"Initially we seemed to get a little strength on the idea we're expecting a draw in crude stocks tomorrow, but basically, the market continues to consolidate below highs on the uncertainty over supply," he said.

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. of the Organization of the Petroleum Exporting Countries in November agreed their first output cut since 2008 in an attempt to stabilise oil prices. part of the deal, Kuwait has to reduce output by 131,000 barrels per day. OPEC committee meeting to monitor compliance with the agreement is scheduled for Jan. 21-22 in Vienna. are likely to remain volatile until there is evidence that quotas are being adhered to," analysts at Cenkos Securities wrote.

Zahir at Tyche Capital Advisors cautioned that increased oil production from OPEC member Libya has come online faster than anticipated and may deter some OPEC members from cutting their own output.

Also reflecting a tightening market, traders expect top oil exporter Saudi Arabia to raise the official selling price for its crude to Asia in February.

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