Oil Rises for Third Day as Saudis Tell Short Sellers ‘Watch Out’

image is BloomburgMedia_RV3R1HT0AFB401_24-05-2023_06-00-10_638204832000000000.jpg

Storage tanks at the Ecopetrol Barrancabermeja refinery in Barrancabermeja, Colombia, on Tuesday, Feb. 15, 2022. Ecopetrol says it expects organic investments in the range of $17b-$20b for 2022-2024, of which 69% is expected to be for upstream projects. Photographer: Ivan Valencia/Bloomberg

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.

Prince Abdulaziz bin Salman spoke at the Qatar Economic Forum in Doha on Tuesday. The government of the State of Qatar is the underwriter of the Qatar Economic Forum, Powered by Bloomberg.

“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.

©2023 Bloomberg L.P.

By Yongchang Chin


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