Oil extends gain above $62 as US crude stockpiles seen falling

Hong Kong - Oil extended gains above $62 a barrel before US government data forecast to show crude stockpiles declined for an eighth week and as political tensions simmer in Iran, Opec’s third-biggest producer.

Futures added as much as 1.3% in New York to the highest intraday level in almost three years. US inventories probably fell by 3.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday.

Iran’s President Hassan Rouhani said on Monday the anger that led to a week of anti-government protests exposed the need for the freedoms he has championed, as well as a stronger economy.

Oil had its best start to a year in five years as the Organisation of Petroleum Exporting Countries (Opec) and its allies continue supply cuts to drain a global glut. US drilling has continued to slow, with explorers trimming the number of rigs targeting crude last week by the most since November.

"Opec supply cuts are continuing and there are some concerns around Iran providing some strength to oil,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. "Rigs counts are declining but healthy shale output should keep a ceiling on the price."

West Texas Intermediate for February delivery gained as much as 83 cents to $62.56 a barrel on the New York Mercantile Exchange, the highest intraday price since May 2015, and traded at $62.09 at 8:44am in London.

Total volume traded was about 45% above the 100-day average. Prices climbed 29 cents to $61.73 on Monday after rising 1.7% last week, the best start to a year since 2013.

Brent for March settlement gained as much as 0.8%, to $68.29 a barrel on the London-based ICE Futures Europe exchange after adding 0.2% on Monday. The global benchmark crude traded at a premium of $5.95 to March WTI.

US crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, probably fell by 1.5 million barrels last week, according to a forecast compiled by Bloomberg.

Inventories slid below 50 million barrels through the week ended December 29, the first time below that level since February 2015, according to EIA data.

Oil-market news:

Libyan crude output is said to have increased to about 1 million barrels a day after recovering from disruptions including repairs to a pipeline, according to a person familiar with the matter.

Saudi Aramco sold full contractual crude volumes for February to four Asian companies, according to traders who asked not to be identified.