Oil prices held above $63 on Wednesday ahead of data expected to show a fall in U.S. crude stocks, adding to perception that high inventory levels that hit prices in the third quarter have been reversed.
U.S. crude for February delivery traded at $63.87 a barrel at 1239 GMT, up 72 cents from the January contract expiry of $63.15 on Tuesday. London Brent February crude
Delays to U.S. oil imports due to dense fog along the Gulf of Mexico coast forced refiners to draw on inventories last week.
U.S. crude stocks were expected to fall 1.7 million barrels in government data due later on Wednesday, according to a Reuters poll of analysts.
The fog disruptions exacerbated an overall tightening inventory picture, analysts said.
U.S. commercial crude and refined product stocks combined were just half a million barrels higher than the same time a year ago last week, a sharp fall from a huge 76 million barrels year-on-year surplus at the end of September.
Crude stocks were still four percent higher than a year ago, but gasoline and distillate stocks were lower.
"I think what we are getting here is a little bit of a delayed reaction to tightening inventories," said Paul Horsnell at Barclays Capital.
"The tightening over the past two months hasn't really been priced fully in yet. Products markets looked horribly slack two months ago, but inventories have been falling by a million barrels per day in the United States."
Other industrialized countries have also seen stocks fall. OECD stocks fell by 40 million dollars in October alone, the International Energy Agency said last week.
"Inventories are still comfortable," said Mike Wittner at investment bank Calyon. "But there is no question at all that we have had a quite serious drawdown in stocks. We're back to square one in terms of where we were a year ago."
