By Jenny W. Hsu
Crude futures made minor gains in early Asia trade Friday, after data from the U.S. Energy Information Administration showed smaller-than-expected growth in U.S. crude stockpiles.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $53.93 a barrel at 0201 GMT, up $0.16 in the Globex electronic session. March Brent crude on London's ICE Futures exchange rose $0.07 to $56.92 a barrel.
Oil trading remained tepid ahead of the New Year holiday. Global oil markets will be closed Monday.
EIA data showed that U.S. crude inventories grew 614,000 barrels in the week ended Dec. 23, a moderate rise compared with the 4.2-million barrels increase tippedby the industry group American Petroleum Institute, but still above the 1.2-million barrel contraction forecast by analysts surveyed by The Wall Street Journal.
At 486.1 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of the year, the EIA said.
"The main driver behind last week's build was a slowdown in refinery activity," said S&P Global Platts, noting that the refinery utilization rate fell 0.5% to 91% of total capacity. This is the time of the year when crude stocks usually fall, as refiners increase production.
Gasoline stock decreased by 1.6 million barrels, while distillates fuel inventories dropped by 1.9 million barrels in the same week. Production also fell by 20,000 barrels from a week earlier, to 8.76 million barrels, roughly 4.4% lower than same period last year.
Analysts say the current downtrend in U.S. oil production could reverse as oil prices rise, frustratingthe Organization of the Petroleum Exporting Countries' latest effort to lift prices by cutting the group's overall output.
In November, after more than two years of low prices, the cartel and 11 non-OPEC players in a landmark pact agreed to slash production by almost 1.8 million barrels a day. If fully implemented, the move could push oil prices to the $60 a barrel range early next year, and to $70 in 2018.
"The market has more faith that the participating nations will comply with the assigned production quotas this time because everyone is eager to get the prices up," said Gao Jian, energy analyst at SCI International.
Since the inking of the deal, several OPEC members have voiced their commitment to the cut. However, most market watchers are waiting to see the production reports for the first few months of 2017 to gauge whether producers have really made good on their pledges. In the past, producers have been known to cheat and produce above their allotted limits.
Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--fell 10 points to $1.6810 a gallon, while January diesel traded at $1.7060, 23 points higher.
ICE gasoil for January changed hands at $501.50 a metric ton, down $1.25 from Thursday's settlement.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
December 29, 2016 22:37 ET (03:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.