Oil extends gains above $78 a barrel in Asia, may end year on stronger note

Oil extends gains above $78 in Asia

KUALA LUMPUR, Malaysia — Oil prices extended gains above $78 a barrel Monday in Asia ahead of inventory figures later in the week that could send it through the $80 mark.

Benchmark crude for February delivery rose 48 cents to $78.53 at midday Singapore time in electronic trading on the New York Mercantile Exchange. Trading was thin due to the holiday season.

The contract rose $1.38 to settle at $78.05 on Thursday, the first time in more than a month that it closed above $78. Oil markets were closed on Friday for Christmas.

Inventory figures from the Energy Information Administration later this week will determine if oil prices can end the year above $80 a barrel, said Clarence Chu, a trader with Hudson Capital Energy in Singapore.

The government last week reported a crude stocks drawdown of five million barrels and if inventories continue to decline — suggesting improved demand — it will be a boost to crude prices.

Improved employment figures in the U.S. last week also buoyed sentiment and raised expectations of stronger consumer spending.

“There is an upside bias and oil can close the year above $80 a barrel but fundamentals are still weak and don’t support oil at this level,” Chu said.

He expects crude inventories to build up again in January, which could easily drag oil prices back down to $70.

In other Nymex trading in January contracts, heating oil rose 2.4 cents to $2.06 while gasoline rose 1.7 cents to $2.01. Natural gas added 14.9 cents to $5.79 per 1,000 cubic feet.

In London, Brent crude for February delivery rose 54 cents to settle at $76.85 on the ICE Futures exchange.