Oil prices lifted by expected fall in U.S. inventories
SocGen expects 2017 oil prices in range of $50-60 per barrel; despite planned output cuts, oil markets remain well supplied.
Oil rose on Wednesday, driven by expectations for a decline in U.S. crude inventories and bringing price gains for December to 10 percent, which would be the strongest performance in the final month of the year in six years.
Brent crude oil futures were up 32 cents on the day at $55.67 a barrel by 1217 GMT, while U.S. crude futures rose 30 cents to $53.60 a barrel.
Brent's rally is its largest so far for any December since 2010, thanks to an unprecedented wave of investor buying ahead of an anticipated drop in supply from some of the world's top exporters next year.
"Oil seems determined to end the year on a high note. Pre-holiday thinned trading and a fresh 14-year high for the dollar index failed to dampen bullish spirits," PVM Oil Associates analyst Stephen Brennock said in a note.
Hourly volume in the front-month contract was around 2,300 lots on Wednesday, compared with an average of 2,400 for hourly volume in the second half of December, according to trading data from the InterContinental Exchange (ICE).
An expected drop in U.S. crude stocks helped underpin the market during Asian trading, but analysts said the effect may be short-lived.
"The ... statistics can be taken as a positive input but U.S. statistics in the last days of the year have little medium-term significance as they can include some data noise for the end-year accounting, which then gets corrected in the first weeks of the new year," Petromatrix analyst Olivier Jakob said.
U.S. commercial crude oil inventories are expected to have fallen for a fifth consecutive week, by 2.5 million barrels, according to a Reuters poll.
The U.S. Energy Information Administration will release weekly inventory data at 1530 GMT on Wednesday.
French bank Societe Generale (SGE.SG) said the agreement between the Organization of the Petroleum Exporting Countries and other leading producers to cut production from January "should push crude prices ... to the $50-60 range in 2017."
Oil markets are expected to remain well supplied despite the planned reductions.
Russia's 2016 oil output is expected to total 547.5 million tonnes (11 million barrels per day), a 2.5 percent increase from the previous year, Energy Minister Alexander Novak told reporters late on Tuesday.
Taking advantage of plentiful and relatively cheap crude, refiners especially in Asia are churning out more fuel than the market can absorb.
By Amanda Cooper