Oil prices seem to be edging up slowly. Despite the sudden increase in U.S. stockpiles, crude oil futures rose in early Asian trade on Thursday with additional trading from Chinese traders following a week long National Day holiday period.
U.S. refineries reduced production last week resulting in an increase of 3.1 million barrels of crude to 461 million barrels. An increase of only 2.2. million barrels was anticipated by analysts.
U.S. crude was up 50 cents, or 1.05 percent, at $48.31 while Brent crude, the global oil benchmark, was up 53 cents, or 1.03 percent, at $51.86 a barrel, after falling 1.1 percent on Wednesday.
Oil Prices to Rise
Commodities king Dennis Gartman voiced optimism that oil prices will continue to rise. “If you watch the term structure in the futures, you've seen the contango narrow. Crude is no longer aggressively bidding for storage as it was it was six or seven weeks ago," he told reporters Wednesday.
According to Gartman, OPEC increased its production in August, caused the WTI/Brent spread to narrow. The two factors that would lead to Brent/WTI narrowing to parity seem to be in place: a decrease in U.S. production and an increase in OPEC production. Gartman pointed to the fall in rig counts over the last six weeks which, he believes, will continue to fall further.
A report put out by the U.S. Energy Information Administration on Tuesday forecasted that global oil demand for 2016 would rise by the fastest rate in six years, faster than expected for the commodity which has dropped over 50 percent of its value since June.