By Jenny W. Hsu
Crude prices made further strides in early Asia trade Wednesday on bullish data that showed a bigger-than-expected drop in U.S. crude stockpiles, reinforcing views that the global oil market is tightening.
Trading remained muted, however, as investors took a break ahead of the year-end holidays.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $53.55 a barrel at 0301 GMT, up $0.25 in the Globex electronic session. February Brent crude on London's ICE Futures exchange rose $0.20 to $55.55 a barrel.
Prices rose after industry group American Petroleum Institute reported that U.S. crude inventories showed a drawdown of 4.1 million barrels in the week ended Dec. 16, while gasoline stocks fell by 2 million barrels and distillates dropped by 1.5 million barrels.
According to a Wall Street Journal survey of 13 analysts and traders, U.S. crude stockpiles likely fell by 2.3 million barrels. They estimated gasoline stockpiles to have grown by 1.1 million barrels and stockpiles of distillates, which include heating oil and diesel, to have fallen by 900,000 barrels.
Official data from the U.S. Energy Information Administration is due later Wednesday.
Investors will also be looking at the production data to determine if the recent price rally has prompted more U.S. shale-oil producers to ramp up output--a move that would undermine the latest effort by the Organization of the Petroleum Exporting Countries and 11 non-OPEC producers to buoy price by cutting production.
Last week, the number of active oil rigs in the U.S. rose by 12 to 510. Since its trough in late May, U.S. producers haveadded 194 oil rigs, a jump of 61%, according to Goldman Sachs.
With prices holding steady above $50 a barrel, analysts say U.S. shalers will be more eager to open the spigots wider.
"The Department of Energy currently forecasts a further recovery of 9 million barrels by December 2017, but we see room for upward revision to that estimate as the rig count trends higher," said Tim Evans, a Citi Futures analyst.
Another data set oil investors will be watching in the near term is China's final November oil data. The report was scheduled to be released Wednesday but the government said in an email it had postponed the publication, without elaborating.
In its preliminary report, China said crude imports last month rose 18% from the previous year to 32.35 million metric tons, or roughly 7.9 million barrels a day.
Supported by a batch of new independent refineries, known as teapots because their small size, China's appetite for crude isexpected to remain elevated next year. Earlier this month, China said the collective import quota for private refiners will remain at 1.76 million barrels a day in 2017.
"The move will likely enhance competition among independent refiners on the domestic market," said JBC Energy, adding that it expects China's crude import to average 7.8 million a day in 2017, up by around 300,000 barrels a day.
Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--rose 44 points to $1.5980 a gallon. ICE gasoil for January changed hands at $489.75 a ton, down $1.75 from Tuesday's settlement.
Write to Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
December 20, 2016 23:06 ET (04:06 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.