Oil rallied for a second day on Wednesday, buoyed by an unexpected decline in US crude inventories and after Saudi Arabia appeared undaunted by pressure from US President Donald Trump on OPEC to prevent steeper price rises.
Saudi Energy Minister Khalid al-Falih said OPEC and its partners were “taking it easy” in response to a tweet from Trump on Monday that called on the group to slacken its restrictions on crude production.
The oil price has risen by almost a quarter so far this year, after the Organization of the Petroleum Exporting Countries, together with other producers such as Russia and Oman, agreed to cut output to avoid the build-up of a global surplus, particularly as US output has boomed.
Brent crude futures were up 91 cents on the day at $66.12 a barrel by 1255 GMT, while US futures rose $1.13 to $56.63 a barrel.
“Donald Trump tweeted and OPEC replied. It was not the message he wanted to hear so the story is not over yet,” PVM Oil Associates strategist Tamas Varga said.
Trump tweeted on Monday, warning about the threat of high oil prices and called on OPEC to “take it easy”, which triggered the biggest one-day drop in the futures price so far this year.
US gasoline prices up
“Trump’s tweet is likely to have been sparked in particular by the sharp rise in US gasoline prices,” Commerzbank said.
US gasoline futures have risen by more than 16 percent in the last month, compared with a near-6 percent rise in US crude futures.
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Based on current market data, the so-called OPEC+ group is “likely to continue with the production cuts until the end of the year”, a Gulf OPEC source told Reuters on Tuesday.
Russian energy minister Alexander Novak also said this week the oil market was more or less stable and price volatility, which is unwelcome to both producers and consumers, was low.
Also underpinning the oil market on Wednesday was a surprise drop in US crude inventories, which fell by 4.2 million barrels in the latest week, according to the American Petroleum Institute. This compared with forecasts in a Reuters survey for a rise of 2.8 million barrels.
“Crude oil futures bounced as OPEC members remained firm on planned production cuts despite heightened political pressure from US President Trump early this week,” said Benjamin Lu of Singapore-based brokerage Phillip Futures.