Oil Ticks Higher in Asia

Crude-oil futures were marginally higher in Asian trade Wednesday after overnight losses while focus shifts to this week's U.S. inventory data and the European Central Bank's meeting.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $46.94 a barrel at 0435 GMT, up $0.47 in the Globex electronic session.

Brent crude, the global oil benchmark, for March delivery rose $0.45 to $48.44 a barrel on London's ICE Futures exchange.

U.S. oil production is being driven higher by the shale boom that has contributed to much of the current global crude oversupply, and the subsequent decline in oil prices.

U.S. oil stockpiles are expected to take it up a notch and post another week of record gains. The American Petroleum Institute will publish its weekly inventory data later in the day, followed by the U.S. Energy Department Thursday.

Slower consumption by oil refineries makes further accumulation of oil stocks quite likely, while a narrow price difference between U.S. and global oil prices suggests higher imports, analyst Tim Evans at Citi Futures said.

"With inventories already at 387 million barrels...we see potential for the total to break last April's 399 million-barrel record, making a stronger bearish statement," Mr. Evans said in a report.

Oil markets are looking for signs that spending cuts by oil companies might help shrink the global oil glut. Earlier Wednesday, Australia's BHP Billiton Ltd. flagged up to $250 million in write-downs on its petroleum business and indicated a sharp reduction in U.S. drilling activity.

The Baker Hughes rig count, a measure of U.S. drilling activity, was down 74 to 1,676 in the week to Jan. 16, the lowest level in 16 months and below the previous year's level of 1,768, according to Mizuho Securities.

Meanwhile, the Bank of Japan on Wednesday cut its near-term inflation outlook due to low oil prices. It also projected oil prices would rise to about $70 a barrel toward the end of its forecast period through March 2017, from a "starting point" of $55 a barrel.

"The oil market will remain well oversupplied until oil is physically removed from the market or there is a material improvement in global oil demand," BMO Capital Markets said. It said oil prices would need to move low enough to roughly $40 a barrel to force producers to shut production.

Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--rose 130 points to $1.3258 a gallon, while February diesel traded at $1.6393, 127 points higher.

ICE gasoil for February changed hands at $524.50 a metric ton, unchanged from Tuesday's settlement.

Rhiannon Hoyle and Takashi Nakamichi contributed to this article.

Write to Eric Yep at [e-mail]

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