Oil gains on US demand expectations

SINGAPORE: Oil prices extended gains in Asian trade Wednesday after a weekly industry report showed demand for crude increased in the world's largest energy-consuming nation, analysts said.

New York's main futures contract, light sweet crude for delivery in July, rose 53 cents to 72.52 dollars a barrel while London's Brent North Sea crude for July added 20 cents to 72.50 dollars.

"Oil prices were a little bit firmer last night and have steadied around those higher levels in trading this morning," said Sydney-based David Moore, a commodity strategist with the Commonwealth Bank of Australia.

Moore said prices received support from a report by the American Petroleum Institute (API) that showed a larger-than-expected drop in US crude stocks last week.

The report showed crude stockpiles saw a decline of 4.5 million barrels for the week ending June 4, beating expectations of a 1.3 million barrel drop.

Moore added investors would be eyeing the government's weekly report on oil inventories due out later Wednesday for a clearer picture on the demand outlook as well as other economic indicators in China, the second-largest oil consumer.

"The Chinese trade data due out (Thursday) will indicate the new term direction and the Chinese industrial production data due out on Friday will probably be influential for the market as well," he said.

Oil prices were also helped by positive sentiment following remarks by Federal Reserve chairman Ben Bernanke, who said he was not expecting a double dip recession in the world's largest economy.