Oil prices trimmed gains on Wednesday, but remain strong after US inventories and fuel supplies tightened, and the Saudi energy minister’s warning to speculators raised the possibility of an OPEC+ output cut.
Brent crude futures last rose 74 cents, or 1%, at 0645 GMT to $77.58 a barrel, while the West Texas Intermediate crude (WTI) gained 84 cents, or 1.2%, to $73.75 a barrel.
Brent had previously climbed as high as $1.03 a barrel to $77.87 a barrel. WTI rose as much as $1.07 a barrel to $73.98.
Oil is up after Saudi Arabia’s threat to short sellers, and Saudi Arabia’s energy minister advised them to “be careful”. Saudi Arabia intends to do whatever it takes to keep prices in check and fears of shortages have risen.
Some investors took this as a sign that the Organization of the Petroleum Exporting Countries and their allies, including Russia, might consider further production cuts at a meeting on 4 June.
Speculation that OPEC+ might cut production further to maintain price stability raised prices, while industry data late Tuesday showed that US crude and fuel stockpiles fell sharply, pushing oil prices higher.
Crude oil inventories fell by about 6.8 million barrels in the week ending May 19, according to market sources citing figures from the American Petroleum Institute (API). Gasoline stocks decreased by about 6.4 million and distillate stocks decreased by about 1.8 million.
If the Energy Information Administration’s (EIA) data to be released on Wednesday confirms the API figures, US gasoline inventories will have dropped to their lowest pre-Remembrance Day levels since 2014 for the third week in a row, and recession concerns may be eased accordingly.
The Memorial Day holiday in the United States, May 29 this year, traditionally marks the start of the busiest summer travel in the United States.
Other oil markets are still wary of the US debt ceiling debate, which has dampened oil price increases. Another round of debt ceiling talks ended Tuesday with no signs of progress as the deadline for the government to increase the $31.4 trillion borrowing limit or risk default approaches.