Oil extends gains as industry report shows stockpile drop

Hong Kong - Oil extended its advance as industry data showed US crude stockpiles declined last week, trimming an inventory overhang.

February futures rose as much as 0.9% in New York after climbing 0.5% on Tuesday. Crude inventories dropped by 4.15 million barrels, the American Petroleum Institute was said to report.

That compares with a  forecast 2.5 million-barrel decrease expected in Wednesday’s Energy Information Administration report. Libya reopened two of its biggest oil fields and is set to load the first crude cargo in two years from its largest export terminal.

Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed November 30 to cut output for the first time in eight years. Non-OPEC producers including Russia will also trim supply. US crude inventories, at the highest seasonal level since the EIA began compiling weekly data in 1982, are projected to decrease for a fifth week.

“The API statistics can be taken as a positive,” said Olivier Jakob, managing director of Zug, Switzerland-based consultants Petromatrix GmbH. “When we return to a full market in early January, if Libya is indeed back, we expect that it will start to weigh on speculative sentiment.”

West Texas Intermediate for February delivery gained as much as 49 cents to $53.79 a barrel on the New York Mercantile Exchange and was at $53.54 at 12:13. The January contract expired Tuesday after adding 11c to $52.23 a barrel. Total volume traded was about 40% below the 100-day average.

US stockpiles

Brent for February settlement rose as much as 52c to $55.87 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 43c to $55.35 on Tuesday. The global benchmark crude traded at a premium of $2.06 to WTI.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased by 609 000 barrels last week, the API reported on Tuesday, according to a person familiar with the data.

Oil-market news:

Pipelines connecting the Sharara oil field in Libya to the Zawiya refinery and the El-Feel field to the Mellitah energy complex reopened at the town of Rayayina, according to a statement by the state-run National Oil.

OPEC’s agreement to reduce oil production may help send prices above $70 a barrel next year, according to Citigroup’s Ed Morse. Kuwait Petroleum will cut contracted volumes to customers around the world, including some in the US, according to a company official, who asked not to be identified because contracts are a private matter.

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