Oil climbs on US fuel demand, Saudi minister’s comments

May 24, 2023 (MLN): Oil prices climbed on Wednesday as the Saudi energy minister’s caution to speculators suggested more OPEC+ production cuts on top of U.S. data revealing shrinking inventories and fuel stocks.

Brent crude climbed 0.32% to $77.75 per barrel.

While West Texas Intermediate crude (WTI) rose 0.42% to $74.02 per barrel.

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman stated that "Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don't have to show my cards I'm not a poker player, but I would just tell them to watch out," as Reuters reported.

Some market participants took this as a sign that OPEC+ might contemplate more production cuts at the June 4 meeting, which includes Russia and other OPEC exporting countries.

However, Craig Erlam, OANDA market analyst said that if past experience is anything to go by, traders may be tempted to call his bluff.

According to American Petroleum Institute (API) figures, U.S. Crude inventories fell about 6.8 million barrels last week, while gasoline inventories dropped about 6.4m.

However, this data will be confirmed once Energy Information Administration (EIA) releases the official data which is due on Wednesday.

The gain in oil prices can also be attributed to an increase in U.S. gasoline futures in the previous trading session ahead of the Memorial Day holiday on May 29 which usually signals the beginning of the high summer fuel demand season.

Meanwhile, still no debt ceiling has been finalized after the talks on Tuesday, and the clock is ticking with only a week left before June 1.

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