* IEA says oil market tightening slowly as demand rises
* Rising U.S. shale output to balance OPEC, non-OPEC cuts
* OECD oil inventories dropping, IEA says
* Coming Up: U.S. oil inventory data due at 11 a.m. EST (1600 GMT) (Updates throughout, adds comment, changes dateline to NEW YORK; previous LONDON)
By Devika Krishna Kumar
NEW YORK, Jan 19 (Reuters) - Oil prices rebounded from a one-week low on Thursday as the International Energy Agency said oil markets were tightening even before cuts agreed by OPEC and other producers took effect.
The IEA said that while it was "far too soon" to gauge OPEC members' levels of compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.
Trading was relatively quiet early in the U.S. session as traders awaited weekly inventory data from the U.S. Energy Information Administration (EIA) at 11 a.m. EST (1600 GMT).
American Petroleum Institute (API) data on Wednesday showed U.S. crude stocks fell 5.04 million barrels in the week to Jan. 13, well above the expectations of a 342,000-barrel decline. The data also showed much larger-than-expected increases in stocks of gasoline and distillates. the weekly reports of U.S. inventory levels can reveal quickly whether the tightening of supply is already causing stocks to be reduced."
"The sharp fall in crude oil stocks reported yesterday by the API would underpin this hypothesis of tightening supply, especially as it was attributable to considerably lower imports," Commerzbank (DE:CBKG) said in a note.
Benchmark Brent crude LCOc1 was up 68 cents, or 1.26 percent, at $54.60 a barrel by 10:29 a.m. EST (1529 GMT) after closing down 2.8 percent in the previous session. U.S. crude CLc1 was also up 68 cents, or 1.33 percent, at $51.76 a barrel, having dropped to a one-week low on Wednesday of $50.91.
Oil prices have gyrated this year as the market's focus has swung from hopes that oversupply may be curbed by output cuts announced by the Organization of the Petroleum Exporting Countries and other producers to fears that a rebound in U.S. shale production could swamp any such reductions.
The head of the IEA, Fatih Birol, said in Davos, Switzerland, that he expected U.S. shale oil output to rebound by as much as 500,000 barrels per day over the course of 2017, which would be a new record. which is cutting oil output alongside independent producer Russia for the first time in years, wants a lasting partnership with Moscow, Saudi Energy Minister Khalid al Falih told Reuters. He also said extending the deal for a full year if the market rebalances was not needed. IEA sharply raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets. analysts said it was crucial that OPEC and other producers cut output as promised, particularly as a resilient U.S. shale industry threatened to add more barrels to the market.
"Discipline and strict adherence to the new quotas will be needed probably throughout 2017 and beyond to see the long-awaited and sustainable rebalancing finally arrive," PVM Oil Associates analyst Tamas Varga said.