Oil prices rise ahead of US inventory data

Expectations of a decline in US crude inventories were pushing oil prices higher in European trading on Wednesday.

London's benchmark Brent contract for delivery in August climbed 48 cents from Tuesday's close to $64.93 around 1000 GMT in trading on the Intercontinental Exchange (ICE).

US benchmark West Texas Intermediate for August delivery climbed 45 cents at $61.64 a barrel in electronic trading on the New York Mercantile Exchange (Nymex).

Analysts at Commerzbank said oil prices were being "... boosted by the inventory report of the American Petroleum Institute which showed that crude oil stocks in the US had decreased by 3.2 million barrels last week."

They noted that is nearly twice as much as the market expects from the US Department of Energy when it releases its weekly report later Wednesday.

A survey of experts by Bloomberg news agency has a median forecast of a drop in crude stocks by 2 million barrels in the week ending June 19.

A decrease in crude oil stocks would indicate strengthening demand in the world's biggest economy -- a signal that would be welcomed by the market, especially given the current excess supply in the oil market.

Analyst Ole Hansen at Saxo Bank noted that while US oil inventories have fallen over the past several weeks they are still above the five-year average.

"There needs to be a bigger drop in order to see the price moving up significantly," he said.

"Investors should keep an eye on overall production levels which are still far too high," he added.

OPEC countries have refused to the cut production in an order to push high-cost US shale oil players out of the market, but despite a drop in oil prices of over 50 percent from last June to January, US production has proved mostly resistant.