Oil prices increased on Wednesday as a result of data showing tightened US fuel and inventory supplies as well as a warning to speculators from the Saudi energy minister that raised the possibility of additional OPEC+ output restrictions.
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By 08:37 GMT, Brent crude futures had increased by 88 cents, or 1.2 percent, to $77.72 per barrel, while US West Texas Intermediate crude (WTI) had increased by 98 cents, or 1.3 percent, to $73.89 per barrel.
The oil minister of Saudi Arabia warned short sellers—those who wager that prices will decline—to “watch out” for suffering.
Some investors interpreted that as an indication that the Organisation of Petroleum Exporting Countries and Allies, generally known as OPEC+, may contemplate additional output restrictions at a meeting on June 4. OPEC+ includes allies such as Russia.
Industry data that showed a large decline in US crude oil and fuel inventories helped to raise oil prices as well.
According to data from the American Petroleum Institute (API), market sources estimate that crude stockpiles decreased by 6.8 million barrels last week. Stocks of petrol decreased by roughly 6.4 million.
If the Energy Information Administration’s (EIA) data, which is expected on Wednesday, supports these estimates, US petrol inventories would have decreased for a third week in a row to their lowest levels prior to Memorial Day since 2014.
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Memorial Day weekend, which falls on May 29 this year, generally ushers in peak summer travel season and increasing fuel demand.
Another round of debt ceiling negotiations came to an end on Tuesday with no sign of progress, putting pressure on global markets as the deadline to raise the government’s borrowing limit or risk default approached.
The ongoing impasse in the United States over lifting the debt ceiling has soured investor confidence in recent weeks.
Prince Abdulaziz bin Salman, the energy minister for Saudi Arabia, issued a fresh warning to traders on Tuesday against shorting oil futures, less than two weeks before the June 4 meeting of the OPEC+ panel on production policy.
The most significant oil official in the top crude oil exporting nation’s remarks sparked concern that OPEC+ ministers may once again shock the markets when they gather in early June.
Energy merchants have rapidly discovered that you should “Don’t fight the Saudis” when it comes to oil pricing since they will do anything it takes to defend prices.
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Investor confidence has recently declined as a result of the protracted standoff in the United States over raising the debt ceiling.
Less than two weeks before the June 4 meeting of the OPEC+ panel on production policy, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, again warned traders against shorting oil futures on Tuesday
The statements of the top oil official in the largest exporter of crude oil raised fears that the ministers of OPEC+ may again shock the markets when they meet in early June.
Energy traders quickly learned that it is best to “Don’t fight the Saudis” when it comes to oil pricing since they will go to any lengths to protect prices.