SINGAPORE (Reuters) - Oil edged lower on Wednesday as expectations of an increase in U.S. inventories weighed on the market, offsetting bullish momentum from output cuts announced by OPEC and other producers.
Brent crude, the international benchmark for oil prices, had dropped 15 cents, or 0.3 percent, to $55.29 a barrel by 0228 GMT. U.S. West Texas Intermediate (WTI) crude futures lost 22 cents, or 0.4 percent, to trade at $52.96 a barrel.
Weekly inventory data from the American Petroleum Institute showed U.S. crude, gasoline and diesel stocks all rose last week. The Energy Information Administration will report its data at 1530 GMT.
Analysts estimated U.S. crude stocks increased by about 2.8 million barrels in the week to Jan. 20.
"The market will focus on tonight's EIA data, which is the most likely market moving event in the next 24 hours," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.
"I am seeing estimates here of a build of 2.5 million barrels. But there is a wide spread (in estimates) which is a reason to think tonight's data could be market moving."
U.S. oil production has risen by more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak. It is back to levels reached in late 2014, when strong U.S. crude output contributed to a crash in oil prices.
The push by Republicans in the U.S. House of Representatives for a shift to border-adjusted corporate tax could push U.S. crude prices higher than the global benchmark Brent, triggering large-scale domestic production, according to analysts at Goldman Sachs on Tuesday.
The dollar held gains, with a rebound in Treasury yields helping the greenback pull away from recent lows plumbed against the yen and euro amid concerns about U.S. President Donald Trump's protectionist stance.
A stronger dollar makes greenback-priced crude oil expensive for foreign buyers holding other currencies.
Oil prices have received support from plans by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to reduce output in a bid to boost prices.
Around 1.5 million barrels per day (bpd) has already been taken out of the market from about 1.8 million bpd agreed by oil majors starting on Jan. 1, energy ministers said on Sunday, as producers look to reduce oversupply.
Bernstein Energy said global oil inventories declined 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. That amounts to about 60 days of world oil consumption.
"More participants to the recent production agreement said they were close to implementing their share of the reduction," ANZ said in a note to clients.
(Reporting by Naveen Thukral; Editing by Joseph Radford)