Oil rose for a third session after Saudi Arabia issued a warning to short-sellers, suggesting OPEC+ might reduce output to buoy prices.
West Texas Intermediate climbed toward $74 a barrel after adding almost 2% over the previous two days. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told speculators to “watch out,” just over a week before the alliance meets to review its production policy for the second half of the year.
That offset a lack of progress in resolving an impasse over the US debt ceiling, which weighed on broader financial markets. Speaker Kevin McCarthy said late Tuesday the two parties had yet to reach a deal to avert a first-ever default.
“A warning to markets from Saudi Arabia triggered a relief rally in crude oil,” said Charu Chanana, a Singapore-based market strategist for Saxo Capital Markets Pte. The comments are “raising the specter of OPEC further intervening in the oil market to support prices,” she added.
Adding to the bullish sentiment, the industry-funded American Petroleum Institute reported US nationwide crude inventories declined by 6.8 million barrels last week. If confirmed by government figures later Wednesday, it would be the biggest drop since late March.
Oil is still down for the year as China’s lackluster economic recovery after abandoning Covid-Zero, interest-rate hikes from the Federal Reserve and, more recently, the lack of an agreement on the debt ceiling weigh on the outlook. Russian flows have also remained robust, despite sanctions.
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