Oil Climbs, US Fuel Scarce, Saudi Warns
Oil prices went up on Tuesday due to forecasts of a tighter gasoline market. The Saudi energy minister warned speculators, which hints there could be more OPEC+ output cuts.
The value of Brent crude futures went up by 1.1% to $76.84 a barrel. The U.S. West Texas Intermediate crude (WTI) also increased by 1.2% to $72.91 a barrel. This means that oil prices are rising.
In post-settlement trade, both benchmarks surged about 2%. This was due to data from the American Petroleum Institute (API) showing a big decrease in crude and gasoline from the previous week. Market sources shared this information.
On Wednesday, we're expecting official inventory data from the Energy Information Administration. If it agrees with the industry body's stats, U.S. gasoline inventories would have gone down for three weeks in a row. This has brought stocks to their lowest levels before Memorial Day since 2014.
Memorial Day is a U.S. holiday that starts the peak summer travel season. On May 29, it happened this year. On Tuesday, the American Petroleum Institute (API) released data that caused the price of gasoline futures to increase by 2%.
OPEC+ members are now cutting production. Saudi Arabia's energy minister warned short sellers to watch out and said he will keep them "ouching". This caused concerns about supply shortage to rise.
OANDA analyst Craig Erlam said that comments suggest OPEC and its allies might discuss additional output cuts at a June 4 meeting.
Erlam said Brent crude prices must reach $77.50 a barrel. This would show a change in sentiment.
Traders are not bothered by his words. The group announced two large cuts last year. These briefly affected the markets. Actions are more important than words. Erlam stated this.
Oil's rise may be hindered by concerns about the U.S. debt ceiling. No progress was seen during the latest round of talks on Tuesday. The government faces the risk of default if its borrowing limit of $31.4 trillion isn't raised.
Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said that oil prices would stay within their range for the year as the economy slows down. The Strategic Petroleum Reserve's refill and OPEC management will keep prices in line with global needs for oil demand.
Alex Lawler, Yuka Obayashi and Andrew Hayley contributed to this report. It was edited by Marguerita Choy and Emelia Sithole-Matarise.
