US crude extends rally by US$1 a barrel, but swelling inventory drags

Crude prices closed more than 4 per cent higher on Thursday as conflict in producer Libya and an expected boost in oil demand following China's central bank easing helped the market rebound. -- PHOTO: AFP
Crude prices closed more than 4 per cent higher on Thursday as conflict in producer Libya and an expected boost in oil demand following China's central bank easing helped the market rebound. -- PHOTO: AFP

SINGAPORE (Reuters) - U.S. crude rose as much as US$1 in early Asian trade on Friday, continuing a rebound from near six-year lows plumbed last week, but rising global inventories could cap gains.

Crude prices closed more than 4 per cent higher on Thursday as conflict in producer Libya and an expected boost in oil demand following China's central bank easing helped the market rebound.

U.S. crude for March delivery was up 36 cents at US$51.84 by 0018 GMT, after trading as much a US$1 higher earlier in the session. The contract had finished up US$2.03, or 4.2 per cent, at US$50.48 a barrel the previous day.

Benchmark Brent crude futures settled up US$2.41, or 4.5 per cent, at US$57.57 a barrel on Thursday.

Growing numbers of OPEC delegates say they expect no rapid recovery in oil prices, even as the market shows signs of a tentative rally from near six-year lows.

Top OPEC producer Saudi Arabia cut its monthly oil prices for Asian buyers to the lowest level in at least 12 years. The cuts signal an attempt by the Kingdom to maintain market share in its key market by offering competitive prices and forcing higher-cost producers to curb supply.

A U.S. refinery strike at nine plants accounting for 10 per cent of the country's refining capacity would extend into its sixth day, after union leaders rejected the latest contract offer from lead negotiator Royal Dutch Shell Plc.