The report is expected to show U.S. crude stocks fell 1.8 million barrels, according to the average forecasts of analysts polled by Dow Jones Newswires.

Light, sweet crude for February delivery gained 39 cents to US$96.37 a barrel in Asian electronic trading on the New York Mercantile Exchange by late morning in Singapore.

Oil prices fell 2 cents to settle at US$95.98 a barrel Monday -- the last trading day of 2007 -- ending the year 57 percent higher than where they began.

Crude futures surged in 2007 as demand from booming economies in Asia increased. More volatility is expected in the crude futures market this year, analysts said, adding it would be of little or no surprise if oil prices surpassed US$100 a barrel.

"Fundamentally, I think there may be downward pressure on price, but if there's any supply outage or major turmoil or major problems in producing areas you could easily see prices spike over US$100 a barrel," said Jeff Brown, managing director and chief economist at FACTS Global Energy in Singapore.

Other factors that have influenced energy prices recently are the West's standoff with Iran over its nuclear program, attacks by Nigerian rebels on that oil-rich nation's crude infrastructure and Turkish attacks on Kurdish positions in northern Iraq that have sparked concerns of retaliation attacks an oil pipeline in the area.

The assassination of Pakistani opposition leader Benazir Bhutto last week has also exacerbated worries about global instability.

Oil reached a trading record of US$99.29 on Nov. 21, and remains close to the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.

Meanwhile, U.S. gasoline inventories are seen growing 1.6 million barrels, according to the Dow Jones survey of analysts, and stocks of distillate, which includes heating oil and diesel fuel, are expected to fall 300,000 barrels.

At 293.6 million barrels, U.S. crude oil inventories now stand at their lowest level since January 2005, and are in the lower half of the average range for this time of year.

The data by the U.S. Energy Department's Energy Information Administration covers the week that ended Dec. 28 and is due Thursday, a day later than usual because of Tuesday's New Year's holiday.

In other Nymex trading, heating oil futures rose 0.61 cent to US$2.6555 a gallon (3.8 liters) while gasoline prices added 2.22 cents to US$2.5130 a gallon. Natural gas prices added 10.7 cents to US$7.590 per 1,000 cubic feet.

February Brent crude rose 39 cents to US$94.24 a barrel on the ICE Futures exchange in London.