The discount for U.S. crude futures benchmark West Texas Intermediate (WTI) against Brent remained strong at more than $6 a barrel, but below the $8 level hit before the February Brent contract expired last Friday.
But gains in U.S.crude could be capped by the impending restart of Alaska’s main oil pipeline after a shutdown, as well as a suggestion by the International Energy Agency that OPEC may have raised output in response to high oil prices.
On the other hand, Brent prices have been buoyed by concerns over disruptions in North Sea crude supplies.
“We don’t expect any drastic price movements today — there’s a bit of holiday mood still in crude, with trading volumes still fairly low, and the market is in a consolidation mode,” said
Matthew Lewis, an analyst at CMC Markets in Sydney.
“For WTI, at around $91, you will probably see some rebound.”
U.S. crude for February delivery rose 48 cents to $91.86 a barrel by 5:30 a.m. EST, after settling down 16 cents at $91.38 a barrel on Tuesday. The February contract expires on Thursday.
London Brent rose 20 cents to $98.00 a barrel, after gaining 37 cents to settle at $97.80 a barrel.
Traders will scour U.S. economic data due later in the day for more clues to the state of demand in the world’s top energy consumer.
The Commerce Department will release December housing starts and permits at 8:30 a.m. EST, which are expected to be mildly positive. Economists forecast a 550,000 annualized starts rate compared with a 555,000 rate in November. A total of 560,000 permits is expected in December compared with 544,000 in the prior month.
The release of weekly U.S. industry and government oil inventory data this week will be delayed a day following Monday’s national holiday.
On the supply front, Alaska’s main oil pipeline should restore shipments to its normal rate of 630,000 barrels per day in under a week from around 510,000 bpd, after its recent shutdown due to a leak, the operator said on Tuesday.
The IEA said on Tuesday that OPEC leader Saudi Arabia had stealthily boosted output to cool an oil price rally.
Its assessment was starkly at odds with anecdotal evidence from Saudi Arabia’s big customers, and with the views of other analysts and consultants captured in a Reuters survey, which showed the kingdom’s output flat last month.
Royal Dutch Shell shut four Brent North Sea oil and natural gas platforms on Saturday and did not have a restart time.
The outlook for oil demand, on the other hand, remains robust. The IEA raised its 2011 world oil demand growth forecast by 80,000 barrels per day to 1.41 million bpd in its monthly report.
The greenback slid to a two-month low against a basket of currencies on Wednesday, as continued short-covering in the euro helped spur a broad fall in the dollar.
A weaker dollar can lift dollar-denominated oil prices because it lowers the value of currency paid to producers and the price of oil for consumers using other currencies.
Asian stocks rose on Wednesday, taking a cue from Wall Street gains and on hopes for more robust U.S. earnings.