* U.S. crude prices up 9 pct this week
* U.S. crude at slight premium over Brent for most of day
* Drilling activity, crude inventories both fall
* Enterprise and Vitol plan U.S. crude exports
* Overall market conditions remain weak
(Updates prices)
By Henning Gloystein
SINGAPORE, Dec 24 (Reuters) - U.S. crude prices rose for a
fourth straight session on Thursday, headed for a 9 percent
weekly gain in the lead-up to Christmas as the market tightened
on the back of falling supplies and looming exports.
Front-month West Texas Intermediate (WTI) crude futures
CLc1 were trading at $37.82 per barrel at 0749 GMT, up 32
cents on the day and set for the biggest weekly gain since early
October.
With internationally traded Brent futures LCOc1 trading at
$37.79 a barrel, U.S. crude defended a small premium which it
regained this week for the first time in around a year
CL-LCO1=R .
The strengthening U.S. market is a result of falling stocks,
reduced drilling activity, and looming exports following the
lifting of a 40-year old ban of most U.S. crude exports.
"We continue to see the front month WTI-Brent spreads
widen... It will reach $0.50," Singapore-based Phillip Futures
said on Thursday
On the production front, Baker Hughes (N:BHI) reported that U.S. oil
drillers cut rigs for a fifth week out of six.
"The current rig count is... pointing to U.S. production
declining sequentially between 2Q15 and 4Q15 by 320,000 barrels
per day," Goldman Sachs (N:GS) said.
In storage, U.S crude inventories fell 5.88 million barrels
to 484.78 million, still near record highs, the Energy
Information Administration (EIA) said.
The tightening physical market came just as U.S. energy
group Enterprise and oil trader Vitol raced to exploit the end
of the ban on most U.S. crude exports, loading a 600,000-barrel
cargo of domestic light crude oil scheduled for the first week
of January, reportedly heading for Europe, though Asian buyers
might also be interested in U.S. cargoes.
"Judging from the strong production (despite the falling rig
count) as well as inventories in the U.S., it may not be
surprising to see the U.S. playing a bigger role in exporting,"
Phillip Futures said.
Despite this week's bull-run of U.S. crude, overall market
conditions remain weak due to a global overhang in production
that sees between 0.5 and 2 million barrels of crude produced
every day in excess of demand, and analysts said it would take
time for the glut to be worked down.
"Energy prices are likely to rise slightly as production
slips, which will ease the current supply versus demand gap.
Demand growth should remain solid, but inventories will remain
an overhang to markets for much of the year," said Rob Haworth,
senior investment strategist at U.S. Bank Wealth Management.
U.S. crude prices have fallen over 10 percent since the
beginning of the month and remain almost two-thirds below
mid-2014 when prices began to tumble.
(Editing by Christian Schmollinger and Biju Dwarakanath)