US crude futures were trading slightly elevated on Wednesday, as traders await the inventory report before deciding on any major move. Futures for WTI added 0.22% to trade at $36.05 per barrel, while Brent futures gained 0.14% to $36.47 per barrel.

US crude stocks fell by 5.6 million barrels in the week to January 1, the American Petroleum Institute said late on Tuesday, while inventories at the Cushing, Oklahoma, and delivery hub rose by 1.4 million barrels.

The official government data released by the Energy Information Administration will be delivered later on Wednesday, with analysts predicting a rise of about 133,000 for last week.

Investors are still monitoring economic developments in China, which is one of the world's major oil consumers. After a downbeat factory figure on Monday, the market is now facing another disappointment - Chinese services PMI hit a 17-month low in December, adding to fears over the strength of the country's economy.

Meanwhile, a strong US dollar index, which hit a one-month high on Tuesday, weighed on oil prices as well. The commodity is becoming more expensive to buy for traders using other currencies.