* API reports likely U.S. crude stock draw
* Official government figures to be released later on
* Analysts warn that hurdles remain for OPEC to reach output
(Adds comment, updates prices)
By Henning Gloystein
SINGAPORE, Oct 5 Oil prices rose in early
trading on Wednesday after a report that U.S. fuel inventories
may have fallen for a fifth straight week, but contracts
remained near the $50 marker where many traders currently see
fair value for crude.
U.S. West Texas Intermediate (WTI) crude futures were
trading at $49.22 per barrel at 0649 GMT, up 53 cents, or 1.1
percent, from their last settlement.
In international oil markets, benchmark Brent crude
was trading at $51.38 per barrel, up 51 cents, or 1.0 percent.
Traders said the higher prices were largely a result of a
report by the American Petroleum Institute (API) late on Tuesday
showing that U.S. crude inventories likely fell for a fifth
straight week, declining by 7.6 million barrels.
"All eyes now turn to the EIA crude inventory numbers
tonight," said Jeffrey Halley, senior market analyst at
brokerage OANDA in Singapore, adding that another confirmed draw
in crude stocks would likely push WTI over $50 per barrel.
The U.S. government's Energy Information Administration
(EIA) will report official stockpile numbers on Wednesday,
although analysts polled by Reuters expect the EIA to report a
stock build of 2.6 million barrels for the week ended Sept. 30.
Gary Ross, executive chairman at the New York-based
consultancy PIRA, said that a planned deal by members of the
Organization of the Petroleum Exporting Countries (OPEC) to cut
output would likely lead to only modest price rises.
Jason Gammel of U.S. investment bank Jefferies said
implementation of the deal "may prove unsuccessful" due to
rivalries within the group, but he added that "the mere threat
of a production cut should put a floor under oil prices until
the next OPEC meeting on November 30."
Beyond the uncertainty of an OPEC-deal, Gammel said
"security conditions in Nigeria and Libya seem to us the most
acute uncertainties in the market," adding that if output in any
of these countries recovered "that would mean a very hefty cut
from the remaining OPEC members if they want to meet the output
ING bank also warned not to read too much into the planned
OPEC production cut before details were agreed.
"This is still only a plan, and no final agreement has been
made," the bank said, adding that even modest cuts face hurdles
given that Iran, Nigeria and Libya have campaigned for
exemptions, which would mean members such as Venezuela and Saudi
Arabia would have to stomach larger cuts.
The Dutch bank said that higher prices "are possible within
the coming weeks to next few months, although limited."
(Reporting by Henning Gloystein; Editing by Richard Pullin)