Oil edged higher on Wednesday on expectations that U.S. crude oil inventories are falling and on signs that oil producers are willing to stick to agreed output cuts that came into effect this week.
Global benchmark Brent crude futures were up 49 cents at $55.96 a barrel by 0924 GMT (4:24 a.m. ET). The contract had reached a fresh 18-month high in the previous session, but a strong dollar has shaved off most of those gains since.
U.S. West Texas Intermediate (WTI) crude futures were trading at $52.82 per barrel, up 49 cents from the last settlement.
"Positive equities and gains in industrial metals this morning, as well as expectations that U.S. crude oil stocks will show a decline ... are ingredients helping to drive a slight gain in Brent crude this morning," said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.
Weekly U.S. statistics on oil stocks are expected to show a 1.7 million barrel draw on Thursday, analysts polled by Reuters said. [EIA/S]
OPEC member Kuwait also lifted expectations that producers will stick to a deal to reduce oversupply by scaling back production after its state-owned oil producer said on Wednesday it would cut output in the first quarter.
Members of the Organization of the Petroleum Exporting Countries (OPEC) in November agreed their first output cut since 2008 in a bid to stabilize oil prices.
As part of the deal, Kuwait has to reduce output by 131,000 barrels per day (bpd).
Also reflecting a tightening market, traders are expecting top oil exporter Saudi Arabia to raise the official selling price (OSP) for its crude to Asia in February.
(Additional reporting by Henning Gloystein in Singapore, editing by Louise Heavens)