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Oil prices extend gains in Asia

[SINGAPORE] Oil prices rose in Asia on Monday, extending a sharp rebound at the end of last week, with analysts predicting the sector has bottomed out after plunging almost 50 per cent since June.

US benchmark West Texas Intermediate (WTI) for February delivery gained 79 cents to US$57.92 while Brent crude for February added 91 cents to US$62.29 in afternoon trade.

"We do not expect WTI and Brent to test new lows this week," said Daniel Ang, investment analyst at Phillip Futures in Singapore.

"Rather, we believe it would just trend within the same trading range as speculators continue on short-covering," he added.

The gains extended a rebound on Friday, wiping out losses earlier last week that saw prices hit fresh five-year lows.

Oil has shed about half its value since June, and a decision in November by the Organization of the Petroleum Exporting Countries (OPEC) to maintain output levels despite falling prices has weighed on the market.

With few major market events ahead of the Christmas holiday on Thursday, Ang said "US stockpiles data would likely determine prices this week".

US stockpiles data is closely watched by oil investors because it is seen as a key indicator of demand in the world's top crude consumer. A drop in reserves typically indicates increased demand.

Crude stockpiles for the week to December 12 dropped 800,000 barrels, the US Energy Information Administration (EIA) said in last week's report.

The EIA will release the report for the week to December 19 on Wednesday.