Oil Futures Extend Gains

"The fundamentals are clearly bearish," says Brian Gibbons, an energy analyst at CreditSights in New York. He says prices could fall as stockpiles remain high and OPEC continues to have spare capacity. For its part, OPEC is saying it will cut production by 500,000 barrels a day starting in February in an effort to keep prices up.

Elsewhere, Algeria's oil minister Chakib Khelil indicated that the oil-producing organization is unlikely to introduce further cuts at its March meeting, Bloomberg reports.

Turning to the energy patch, Credit Suisse upgraded shares of Frontier Oil(FTO Quote) to a neutral rating from underperform, lifting the shares 2%.

A.G. Edwards boosted its stock price target for Valero GP Holdings(VEH Quote) to $27 a share from $24, sending the stock 1.6% higher at $24.78.

Among the majors, Exxon Mobil(XOM Quote) and BP(BP Quote) were fractionally lower.

The energy exchange-traded funds iPath Goldman Sachs Crude Oil(OIL Quote) and U.S. Oil(USO Quote) were up around 2% each.