In a response to the rising demand for gasoline in the United States, crude futures closed higher on Tuesday (May 23). This positive market trend was further fueled by warnings from Saudi Arabia’s energy minister regarding speculators engaged in short-selling in the US market.
WTI crude futures experienced a significant increase of 86 cents, or 1.19%, settling at $72.91 per barrel. Similarly, BRENT crude futures rose by 85 cents, or 1.12%, settling at $76.84 per barrel.
Supporting this upward trajectory was a recent report from the American Petroleum Institute (API), released the previous day. The API’s data indicated a decline in US crude inventories by 6.799 million barrels, along with a reduction of 6.398 million barrels in gasoline inventories for the week ending May 19. These figures further confirmed the growing demand for gasoline in the United States, and subsequently contributed to a 2% increase in gasoline contracts.
Investors are closely monitoring the official U.S. Energy Information Administration (EIA) oil inventory report, which will be released today. If the EIA data aligns with the API report, it would indicate a continued decline in US gasoline stocks. This decline is particularly significant as it occurs just three weeks before the Memorial Day holiday, marking the beginning of the travel season for Americans, lasting from late May until the US Labor Day holiday in September.
Another factor that bolstered the market was a warning issued by Saudi Energy Minister Prince Abdulaziz bin Salman to speculators engaged in short-selling. Bin Salman cautioned them about the potential consequences, stating, “Speculators are seen in every market. I had warned them before that they would get hurt, and it really hurts in April. I wouldn’t have to show my hand because I’m not a poker player. But I’m just going to remind you to be careful.”
Prince bin Salman’s warning comes just before the upcoming production policy meeting of OPEC Plus, scheduled for June 4. Speculators who have bet on declining oil prices may face significant losses if OPEC Plus decides to further cut production, leading to a surge in oil prices.
Previously, Saudi Arabia and some OPEC Plus members surprised the market by announcing voluntary production cuts in April. These cuts proved instrumental in stabilizing oil prices, which had experienced a sharp decline due to concerns surrounding banking crises in the US and Europe.
With increasing gasoline demand and warnings from influential figures within the oil industry, the market remains optimistic about the future trajectory of oil prices. Investors are eagerly awaiting the outcomes of the upcoming OPEC Plus meeting, which could potentially dictate the market’s direction in the coming months.
The Spot Market is Open
Wednesday May 24, 2023
| Energy Updated at | USD Price | Chnage | %Change |
| Crude Oil 11.00 | 73.77 | +0.86 | +1.10% |