Oil up in Asian trade on unexpected dip in US stockpiles

SINGAPORE: Oil prices extended their rally in Asian trade Thursday on the heels of a larger-than-expected decrease in energy stockpiles in the US, analysts said.

New York's main futures contract, light sweet crude for delivery in February, rose 53 cents to 77.20 dollars a barrel in the afternoon.

Brent North Sea crude for February delivery gained 70 cents to 76.15 dollars.

The Christmas Eve market surge was largely driven by a fall in US energy inventories that was far larger than expected, analysts said.

Data released by the US Department of Energy Wednesday showed stockpiles of crude dropping by 4.9 million barrels to 327.5 million in the week ending December 18, beating analyst expectations of a 1.1 million barrel drawback.

Distillate inventories also slid 3.1 million barrels last week, against analyst forecasts of a 1.6 million barrel fall.

Data for distillates, which include heating oil, is in focus as winter starts to bite in the United States and Europe.

However, analysts cautioned that despite the fall in US crude stockpiles, inventory levels were still high in the world's largest energy consumer.

"Crude oil stocks are still lingering near the upper end of the five-year range, thus creating doubt in our mind as to the underlying strength of the recent price rally," MF Global analyst Tom Pawlicki said.