Oil prices edged higher on Tuesday on forecasts of a steep draw in U.S. crude oil stocks that could indicate a global oversupply is starting to shrink. Analysts expected weekly U.S. crude oil inventories to show a draw of 2.4 million barrels in the week ending December 16. The American Petroleum Institute, an industry group, said U.S. crude stockpiles fell by 4.1 million barrels in the previous week.
“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.