SINGAPORE: Oil prices extended gains above $79 a barrel Wednesday in Asia after an unexpected drop in U.S. crude supplies suggested demand could be improving.

Benchmark crude for December delivery was up 35 cents to $79.49 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 24 cents to settle at $79.14 on Tuesday.

U.S. crude inventories unexpectedly fell last week, the American Petroleum Institute said late Tuesday. Crude stocks fell 4.4 million barrels while analysts had expected a rise of 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration plans to announce its inventory report later Wednesday.

Crude prices have zigzagged around $79 a barrel for more than a month as investors mull mixed economic data from the U.S.

Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results Wednesday. Traders will next be eyeing the holiday shopping season for signs of improving consumer confidence.

In other Nymex trading, heating oil rose 0.64 cents to $2.06 a gallon. Gasoline for December delivery gained 1.11 cents to $2.02 a gallon. Natural gas for December delivery jumped 3.8 cents to $4.57 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 37 cents to $79.34 on the ICE Futures exchange.