Oil prices up in thin New Year trade

Dealers welcome a larger-than-expected drop in US crude stockpiles

Oil prices rose today in thin Asian trading during the first session of the New Year, as dealers welcomed a larger-than-expected drop in US crude stockpiles, analysts said.

West Texas Intermediate for February delivery, the US benchmark, rose 56 cents to $53.83 in afternoon trade. Brent crude for February gained 12 cents to $57.45.

In the Asia-Pacific region, markets in China, Japan, New Zealand, the Philippines, Taiwan and Thailand were closed today for a public holiday.

"We are seeing thin volumes with the festive season still ongoing," Daniel Ang, investment analyst at Phillip Futures in Singapore, told AFP.

"The gains in Asian trading are likely because of the positive US crude stockpiles data released on Wednesday," Ang added.

US crude reserves fell by 1.8 million barrels in the week to December 26, the US Energy Information Administration said in its last petroleum report for 2014 released yesterday.

The figure upended expectations for an increase of 900,000 barrels projected in a Bloomberg survey. A decline in US crude stocks typically indicates strong demand in the world's top oil consumer, pushing global prices up.

US crude production meanwhile stood at more than nine million barrels per day, its highest level in more than 30 years.

Ang said investors were cheering the fact that "production levels are stabilising and we aren't seeing the steep increases of recent weeks".

"We will have a better picture of which direction oil is headed in when traders return from holidays on Monday," he said.

Oil prices lost nearly half their value in 2014 from a peak in June owing to a global supply glut, as well as slowing growth in China and emerging market economies, a recession in Japan and a near-stall in the eurozone.

The OPEC oil-producing cartel last month said it would maintain output levels despite ample global supplies, in part due to cheaper oil extracted from North American shale rock.