Oil prices extended gains on Tuesday, continuing its clawback from a trough in December last year, amid bullish energy stocks on wide expectations of rising global demand.

Crude futures were backed as energy stocks were traded broadly higher on Tuesday, with the NYSE energy sector index rallying over 0.7 percent and shares of energy companies in the S&P 500 up more than 1 percent.

Yet adding to the ongoing concerns over supply surplus, British energy firm BP announced Tuesday that it plans to invest 1.3 billion U.S. dollars to develop its Atlantis oilfield in the Gulf of Mexico.

Moreover, it has also discovered 1 billion barrels of oil at its Thunder Horse field in the region by means of new technology. Additionally, the company, the Gulf of Mexico's largest producer, has also found two new offshore oil in a nearby field.

The West Texas Intermediate for February delivery increased 1.26 U.S. dollars to settle at 49.78 dollars a barrel on the New York Mercantile Exchange, and the Brent crude for March delivery rose 1.39 dollars to close at 58.72 dollars a barrel on the London ICE Futures Exchange.