Oil prices rose more than a dollar a barrel on Tuesday on forecasts for a tighter gasoline market and a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts.
U.S. West Texas Intermediate (WTI) crude gained $1.33, or 1.9 per cent, to $73.38 a barrel by 1:01 p.m. EDT (1701 GMT). Brent crude was up $1.26, or 1.7 per cent, at $77.25 a barrel.
On Monday, prices rose 1.3 per cent on optimism fed by a surge in U.S. gasoline futures.
Gasoline futures rose another 1.2 per cent on Tuesday, with analysts expecting a third straight weekly decline in inventories ahead of peak summer travel season which starts on the U.S. Memorial Day holiday on May 29.
A U.S. inventory report from the American Petroleum Institute, is due at 4:30 p.m. EDT (2030 GMT). The U.S. Energy Information Administration reports official data on Wednesday.
Production cuts by some OPEC+ members take effect this month. Fears of a supply squeeze mounted after Saudi Arabia’s energy minister said he would keep short sellers – those betting that prices will fall – “ouching” and told them to “watch out”.
The comments could mean the Organization of Petroleum Exporting Countries and allies including Russia will consider further output cuts at a meeting on June 4, said OANDA analyst Craig Erlam.
Erlam added Brent crude prices need to rise above $77.50 a barrel to signal a sentiment shift.
“Of course, actions speak louder than words and traders haven’t been overly deterred by his words, despite the group having announced two sizeable cuts in the last year that briefly shook the markets,” Erlam said.
Some felt oil’s upside was limited U.S. debt ceiling jitters. Talks over increasing the $31.4-trillion U.S. debt limit stretched to another round. White House and congressional Republican negotiators will meet again on Tuesday, with Washington facing risk of default in as little as nine days.
“(Oil) prices are likely to remain within their broad year to date trading range as the economy continues to slow while the refill of the Strategic Petroleum Reserve and OPEC manages prices relative to global demand needs,” said Rob Haworth,, senior investment strategist at U.S. Bank Wealth Management.