"Crude oil prices edged just a tad higher... as traders look ahead to the key US Department of Energy weekly report," Singapore's United Overseas Bank said in a note to investors. The official weekly US stockpiles report Wednesday is expected to show crude inventories dipped 100,000 barrels, on average, in the week to May 30, according to a Wall Street Journal survey of 13 analysts.
A decline in US inventories usually indicates healthy demand in the world's biggest economy, which would in turn support global crude prices. US petroleum products were forecast to show gains, including a 300,000 barrel increase in gasoline inventories. Investors are also monitor the situation in Ukraine.
Government forces and pro-Russian insurgents have been embroiled in skirmishes for weeks in eastern Ukraine, but the fighting has so far not expanded into a full-fledged civil war in the ex-Soviet state. The West has accused Russia of fomenting unrest in its neighbour since the ousting of pro-Kremlin president Viktor Yanukovych in February.
Moscow denies the allegation. Investors fear a full-blown conflict in Ukraine, a conduit for a quarter of European gas imports from Russia, will disrupt supplies and send energy prices soaring.
Analysts say the risk premium associated with the crisis has slightly eased after Russia gave Ukraine a respite of an extra week until June 9 to make payments for gas imports at an increased price set after Yanukovych was ousted.