Crude oil prices rose by more than 1%, during trading today, Wednesday, May 24 (2023), to continue to reap gains for the third consecutive session, amid fears of a supply shortage.
This comes after the decline in US oil stocks and fuel supplies, and Saudi Energy Minister Prince Abdulaziz bin Salman warned speculators of the possibility of further cuts in OPEC + production.
Crude oil prices today
By 06:59 a.m. GMT (09:59 a.m. Mecca time), benchmark Brent crude futures – for delivery in July 2023 – rose by about 1.08%, to reach $77.67 a barrel.
At the same time, US West Texas Intermediate crude futures – for July 2023 delivery – rose, by 1.25%, to record $ 73.82 a barrel, according to what was seen by the specialized energy platform.
Crude oil prices ended their trading yesterday, Tuesday, May 23, with an increase of more than 1%, for the second day in a row, supported by investors’ expectations of constraining the market, in light of the seasonal increase in demand for gasoline.
Warnings of the Saudi Energy Minister
“Crude oil prices are starting to trend higher after the Saudi threat to short sellers,” said Edward Moya, senior analyst at OANDA, adding that Saudi Arabia will likely do “whatever it takes to defend prices.”
Concerns about supply pressures escalated after Saudi Energy Minister Prince Abdulaziz bin Salman warned oil speculators, days before a scheduled meeting of the OPEC+ alliance to decide on future oil policy.
Prince Abdulaziz bin Salman said, in his speech during the Qatar Economic Forum, yesterday, Tuesday: “The speculators – as is the case in any market – will remain. I constantly inform them that they will suffer. They suffered in April. I do not have to reveal my papers; but I will only tell them Beware.”
Some investors took this as a sign that the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as the OPEC+ alliance, may consider further production cuts at the June 4 meeting.
CMC Markets analyst, Tina Teng, said that crude oil prices jumped amid speculation that the OPEC + alliance may cut production further to maintain price stability, according to Reuters.
US oil stocks
Crude oil prices received a boost from industry data late Tuesday, which showed that crude oil and fuel inventories in the United States fell sharply.
US oil inventories fell by about 6.8 million barrels in the week ending May 19, according to market sources, citing figures from the American Petroleum Institute.
Gasoline stocks also decreased by about 6.4 million, and distillate stocks decreased by about 1.8 million, according to data seen by the specialized energy platform.
And if the data issued by the Energy Information Administration – to be announced today, Wednesday – confirms the American Petroleum Institute’s numbers, then US gasoline stocks will have fallen for the third week in a row, to their lowest levels since 2014.
“If this is confirmed by the EIA report, we could start to see some recessionary fears,” said OANDA analyst Edouard Moya.
The Memorial Day holiday in the United States, this year on May 29, marks the start of the summer travel peak in the United States.
Elsewhere, markets were still concerned about the US debt ceiling discussions which in turn dampened gains in Crude Oil prices.
Another round of debt ceiling talks ended on Tuesday with no signs of progress as the deadline for raising the government’s $31.4 trillion borrowing limit or shortening default risks approached.
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