The price of oil slipped slightly but remained above $98 a barrel Wednesday ahead of a report which is expected to show another large drop in U.S. crude stockpiles.
By early afternoon in Europe, benchmark crude for January delivery was down 31 cents to $98.20 in electronic trading on the New York Mercantile Exchange. The contract jumped $1.17 to $98.51 on Tuesday, its highest level in six weeks, on optimism that the U.S. Energy Department's report Wednesday would show supplies fell for the second week in a row.
Figures for the week ending Dec. 6 are expected to show a draw of 2.8 million barrels in crude oil stocks and a draw of 2.1 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
A report late Tuesday from the industry-funded American Petroleum Institute showed a draw of 7.5 million barrels in crude oil stockpiles. Analysts said a surge in refinery operations was likely behind the drop in crude stocks.
Prices were also supported by the latest monthly report from the International Energy Agency, which slightly increased its forecast for global oil demand this year and next.
The IEA now sees demand rising to 92.4 million barrels a day in 2014, compared with an estimate of 92.1 million in November, mostly due to stronger deliveries in Europe and the U.S.
Crude output is also expected to rise during the final quarter of 2013 and early next year, led by increased production in the U.S. and the North Sea.
The Paris-based IEA said oil market participants have been bracing themselves for a soft patch in the first quarter of 2014.
"But upside risk to oil markets, from both the supply and the demand sides, is proving remarkably persistent," it said.
The IEA also noted that Iran's deal with world powers on its nuclear program, which sees some economic sanctions on the country eased, "has not been the watershed moment some had hoped for."
It noted that existing U.S. and EU restrictions on Iranian oil exports remain firmly in place.
Oil has fallen from $110 in September on high supplies, muted demand and a lessening of Middle East tensions. It sank to nearly $92 late last month but has since crept higher as the U.S. and Chinese economies show signs of sustained recovery.
Brent crude, a benchmark for international crude, was down 43 cents to $108.93 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
-- Wholesale gasoline was down 2.21 cents to $2.6608 a gallon.
-- Heating oil retreated 0.35 cent to $3.0138 a gallon
-- Natural gas lost 4 cents to $4.197 per 1,000 cubic feet.
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