Oil prices up in thin New Year trading

[SINGAPORE] Oil prices rose on Friday 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 80 US cents to US$54.07 in mid-morning trade. Brent crude for February gained 71 US cents to US$58.04.

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

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

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

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

The figure upended expectations for an increase of 900,000 barrels projected in a Bloomberg News 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.

Mr 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 slowing growth in China and emerging-market economies, a recession in Japan and a near-stall in the eurozone.

On top of that, the Organization of the Petroleum Exporting Countries last month said it would maintain output levels despite ample global supplies, in part due to cheaper oil extracted from North American shale rock.

AFP