"Fundamentals are quite strong at the moment, with robust demand that's draining crude inventories and geopolitical risks adding a short-term impact on prices", Min Byungkyu, a global market strategist at Yuanta Securities Co., said by phone from Seoul.
Bank of America-Merrill Lynch said last week the spread, or difference, between WTI and Brent, the global benchmark, is what made US crude oil competitive. Housing starts has been expected to edge down by 0.5 percent. Harold Hamm, the company's CEO, said the sale represented the "new normal" and argued WTI should be priced closer to Brent now that more USA oil was on the export market. The drain on the surplus of the five-year average in global crude oil inventories is supported by a production ceiling steered by the Organization of Petroleum Exporting Countries.
The market has been buoyant of late due to developments in the Middle East, where tensions in northern Iraq threatened to disrupt oil flows through a key pipeline from Iraq to Turkey. "There's a general expectation that OPEC will extend the output curbs, but deeper cuts will be needed to more effectively drive up prices".
EIA said that its STEO forecast is based on recent trends in drilling and production on anticipated future changes, driven largely by the WTI crude oil price. Prices on Tuesday added 1 cent to close at $51.88, the highest since September 27. Data from the Energy Information Administration Wednesday is forecast to show a 3.25 million-barrel slide.
Worldwide benchmark Brent crude futures fell two cents to $57.86 a barrel as of 11:18 a.m. EDT (1518 GMT).
US crude inventories fell by 7.1 million barrels last week, according to the American Petroleum Institute late Tuesday.
In total, Iraq is the second largest OPEC oil producer with current output at 4.47 million bpd.
Earlier this week, Iraqi government forces took control of the Kurdish city of Kirkuk, including the North Oil Company, after the autonomous region voted for independence in a referendum last month.
Brent oil prices retreated from three-week highs reached earlier in the day on Wednesday, after a surprising fall-off in US refining runs and an unexpected increase in inventories of gasoline and diesel.