Oil Prices Gain 1% on Massive U.S. Inventory Drop, Demand Fears Remain

The tightening of U.S. stockpiles and fuel supply, as well as a warning from the Saudi energy minister to speculators over prospect of further OPEC+ output cuts, helped push oil prices up by 1% in early Asia trading on Wednesday.

As of 11:51 AM BKK time, Brent crude futures rose 81 cents, or 1.05%, to $77.65 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 88 cents, or 1.21%, to $73.79.

According to OANDA senior analyst Edward Moya, “Oil is starting to turn bullish after the Saudi threat to short-sellers,” and Saudi Arabia will likely do “whatever it takes to defend prices.”

Saudi Arabia’s energy minister cautioned short sellers to “watch out” and promised to keep them “ouching,” raising supply concerns.

Investors speculated that OPEC+ could discuss additional output cuts at their June 4 meeting.

Industry data released Tuesday revealed a significant drawdown in U.S. crude oil and fuel stockpiles, further supporting oil prices. The American Petroleum Institute (API) reports that crude oil stocks dropped by 6.8 million barrels in the week ending May 19. 

Markets were still cautious of U.S. debt ceiling discussions, which slowed oil price advances. Tuesday’s debt ceiling talks finished without any progress amid the deadline approached.