Oil prices rose about 2% on May 24, after a large unexpected drawdown in U.S. crude inventories and a warning from the Saudi energy minister that raised the prospect of further OPEC+ production cuts.
Brent crude futures rose $1.40, or 1.8%, to $78.24 a barrel by 10:51 a.m. EDT (1451 GMT) while U.S. West Texas Intermediate crude (WTI) gained $1.48, or 2%, to $74.39.
U.S. crude inventories posted a massive surprise drawdown, falling by 12.5 million barrels last week to 455.2 million barrels, the Energy Information Administration said on May 24. Analysts had expected an 800,000-barrel rise.
Fuel stockpiles also fell. U.S. gasoline stocks dropped by 2.1 million barrels in the week to 216.3 million barrels, the EIA said, while distillate stockpiles fell by 600,000 barrels in the week to 105.7 million barrels.
The U.S. Memorial Day holiday, this year on May 29, traditionally marks the beginning of the peak summer travel season and higher fuel demand.
"Refiners are absolutely going max out with refinery runs right now, trying to keep up with demand," said Phil Flynn, an analyst at Price Futures Group.
"Oil prices have been so focused on the debt ceiling and interest rates, but really they haven't focused on the supply and demand side which has tightened in the last couple of weeks."
Saudi Arabia's energy minister said short-sellers - those betting that prices will fall - should "watch out" for pain.
Some investors took that as a signal that the Organization of Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, could consider further output cuts at a meeting on June 4.
"Oil prices are trading higher ... buoyed by the latest short-seller warning from Saudi Arabia," said OANDA senior market analyst Craig Erlam.
"(But) if past experience is anything to go by, traders may be tempted to call his bluff."
Weighing on broader markets, another round of debt ceiling talks ended on May 23 with no signs of progress as the deadline to raise the government's borrowing limit or risk default ticked closer.
Negotiators for Democratic President Joe Biden and Republican Speaker Kevin McCarthy were expected to reconvene the morning of May 24, a source familiar with the matter said.
Price rises were also capped by news that Britain's stubbornly high inflation rate fell by less than expected last month, according to official data that raised the chances of more interest rate hikes.
MDU Resources Spins Off Knife River into Public Company
2023-06-06 - Streamlining its focus on regulated utilities and energy infrastructure services, MDU Resources spun off a construction materials subsidiary, Knife River Corp., into a standalone public company.
Private Investment Dynamic Holds Crucial Role in Supply, Security, Future
2023-06-06 - Private equity is coming back to the upstream sector, but is dramatically outweighed by the forecasted market supply needed to prevent a shortfall.
Cheniere Partners Offering Senior Notes Due 2033
2023-06-06 - Cheniere Energy Partners intends to offer senior notes due 2033, subject to market and other conditions.
Is Change Overdue for Overtime Wage Law?
2023-06-06 - Paying well won’t shield companies like Helix Energy that run afoul of the Fair Labor Standards Act.
North Sea Oil Producer Harbour in Merger Talks with Talos: Sources
2023-06-06 - Harbour Energy and Talos Energy have discussed a combination on-and-off for at least half a month, but according to sources, results of these talks could be on the horizon.