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SINGAPORE — Oil prices inched higher above $42 a barrel Thursday in Asia as a lower-than-expected US crude inventory increase sparked investor optimism that the collapse in demand may be slowing.

Benchmark crude for April delivery rose 9 cents to $42.59 a barrel by midmorning in Singapore on the New York Mercantile Exchange. The contract gained $2.54 on Wednesday to settle at $42.50.

The Energy Department’s Energy Information Administration said Thursday that crude inventories rose by 700,000 barrels for the week ended February 20. Analysts expected crude stocks would grow by 2.25 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The department said last week that inventories fell after rising more than 30 million barrels over the previous six weeks, suggesting crude demand, which has been dropping for months, may be stabilizing.

Some investors, however, were skeptical that prices were poised to break out of the $35 to $45 range they’ve been trading in since December. Prices have jumped about 20 percent in the last week.

“I’d like to see a couple more weeks of inventory data to see if this really is a trend,” said Peter McGuire, managing director at investment firm Commodity Warrants Australia in Sydney.

Prices have fallen about 70 percent since July as the worst recession in decades in developed countries sapped consumer demand.

There was more dismal news on Wednesday as the National Association of Realtors in the US said sales of existing homes unexpectedly plunged in January to the lowest level in nearly 12 years, and luxury retailer Saks Inc. reported a fourth-quarter loss as it slashed prices to hold onto affluent shoppers.

Japan said exports fell 46 percent in January while Taiwan reported earlier this week a 42 percent drop in sales abroad last month.

“The numbers coming out of Japan, Germany, Eastern Europe, U.K., and USA are all frightening,” McGuire said. “There’s no sunshine out there.”

McGuire said he expects OPEC to announce a production cut of at least 1 million barrels a day at the group’s next meeting on March 15, a move that should help bolster prices. The Organization of Petroleum Exporting Countries has pledged to reduce output quotas by 4.2 million barrels a day since September.

Leaders of the 13-member cartel have said they would like oil to trade near $70 a barrel.

“These countries really need higher oil prices,” McGuire said. “They’re running out of money.”
In other Nymex trading, gasoline futures fell 0.17 cent to $1.17 a gallon. Heating oil rose 0.23 cent to $1.24 a gallon, while natural gas for March delivery was steady at $4.06 per 1,000 cubic feet.

Brent prices rose 30 cents to $44.59 on the ICE Futures exchange in London. (AP)

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