Singapore: Crude prices were virtually unchanged in early Asian trade on Wednesday as firm demand met strong output, with the market waiting for U.S. storage figures later in the day.

Front month U.S. crude was trading at $60.12 per barrel at 0642 GMT, up 15 cents from its last settlement.

Brent futures were up 13 cents to $63.83 a barrel.

JP Morgan said in its weekly oil research note that U.S. production had posted a new high this week, but that it would start to drop.

"We expect that U.S. crude production will start declining sequentially from this month, which combined with robust demand data will likely result in tighter balances in 2H2015," it said.

U.S. crude stocks are forecast to have fallen 1.7 million barrels last week, according to a Reuters poll of analysts.

Gasoline stocks are expected to be down 300,000 barrels.

Strong US demand

Strong U.S. fuel demand, this week's tropical storm, recent Canadian wildfires that led to the closure of oil production as well as ongoing stock withdrawals have resulted in U.S. prices outperforming international Brent contracts, pulling down Brent's premium {CL-LCO1=R} to January lows of around $3 per barrel.

Overall, most analysts say there is little room for big price rises as the market remains heavily oversupplied.

U.S. Energy Information Administration (EIA) data published this month shows that global petroleum oversupply has more than doubled to a record 2.6 million barrels per day (bpd) since the end of the second quarter of last year, when one of history's biggest oil price routs started.

Despite this, some analysts say they expect prices to rise somewhat going into the second half of the year as demand is strong and stocks are seen falling.

"Fundamentals are at an inflection point and will improve from here with high refinery runs this summer and sequentially declining U.S. crude production. As crude stocks erode, prices will gradually strengthen," said U.S.-based Pira Energy.

PKVerleger, also from the United States, said in a note to clients that "overestimation of non-OPEC supply, when corrected, will further cut the projected glut." 

Clues

Markets are hoping for some clues about the US central bank's timing for an interest rate rise following a broadly upbeat string of data on the world's top economy in recent weeks.

Dealers are "at the edge of their seat, waiting for both the (Federal Reserve) meeting and US crude inventories before making a move on prices," said Daniel Ang, investment analyst at Phillip Futures in Singapore.

The US Department of Energy (DoE) will release its petroleum report for the week to June 12 later Wednesday.

The American Petroleum Institute on Tuesday reportedly signalled a 2.9 million barrel drop in US supplies last week, the seventh consecutive weekly drop.

A dip in US stockpiles is seen as an indicator of healthy demand in the world's top crude consumer, supporting global prices.

Markets have been hoping that a drawdown of the United States' burgeoning reserves during the summer, coupled with a slowdown in its shale output, could whittle down excess global supplies.

A surplus of US stocks was a key reason oil prices collapsed by more than 50 percent between June and January.

"We will be waiting to see how much production increases by. In the event it continues to increase, we should be worried about more supply issues moving forward," Ang said, referring to the DoE report.