By Karolin Schaps and David Gaffen
| LONDON/NEW YORK
LONDON/NEW YORK Oil prices rose on Tuesday to a one-week high on expectations of a steep draw in U.S. crude stocks that could indicate the global glut is starting to shrink.Benchmark Brent crude futures were up 91 cents, or 1.7 percent, at $55.83 a barrel at 11:13 a.m. ET (1613 GMT). Brent hit an intraday high of $55.92. U.S. crude futures rose 52 cents at $52.64 a barrel. Both contracts rose despite a strong dollar, which hit a 14-year high.Crude prices often decline when the dollar strengthens, as it then becomes more expensive to hold dollar-denominated oil contracts.Analysts polled by Reuters expected U.S. crude oil inventories to show a draw of 2.4 million barrels in the week to Dec. 16.
The American Petroleum Institute, an industry group, will release its figures on Tuesday, ahead of official government figures due Wednesday. [EIA/S]"There are expectations that we'll see supplies start to tighten by the end of the year," said Phil Flynn, analyst at Price Futures Group in Chicago. "We'll get more heating oil demand this weekend and could see a drop in production next week and even last week because of the cold temperatures." One outlying factor that has flummoxed some analysts has been a series of increases in U.S. inventories at the key oil storage hub in Cushing, Oklahoma. Flynn said this rise has been largely offset by a drop in Gulf Coast inventories.
Crude stocks fell more than expected last week, feeding expectations for another large drop in this week's figures. A deal to cut global supply among OPEC and non-OPEC producers struck this month has boosted oil prices to 17-month highs. The gains have set up 2016 to be the first year since 2012 in which Brent has risen.
"The new balance seems to be between $53 and $57 a barrel on Brent for the next weeks," said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg. Russian Energy Minister Alexander Novak told Russian newspaper Vedomosti that Russia may extend a production cut beyond the first half of 2017 if needed.Asia is seen posting its biggest net additions to refining capacity in three years in 2017, further boosting demand for crude in the world's largest and fastest-growing oil-consuming region. (Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson, Susan Thomas and David Gregorio)
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Updated Date: Dec 20, 2016 23:30:06 IST