WTI Extends Saudi-Driven Gains After Big Surprise Crude, Gasoline Draws

Oil prices ended higher on the day as comments from the Saudi Energy Minister dominated weakness in PMIs and debt ceiling doubts in the US

“I keep advising them that they will be ouching – they did ouch in April,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the Qatar Economic Forum in Doha on Tuesday.

“I would just tell them: Watch out!”

That statement lifted WTI from overnight lows but not everyone was buying what the Sauds were selling:

“As amusing as it may be to hear the Saudi energy minister issue a warning to oil short-sellers, what ultimately matters is what Saudi Arabia, and, more broadly, OPEC, do rather than what they say,” said Pavel Molchanov, an analyst at Raymond James.

“Actions speak louder than words.”

For now, the next leg could be driven by inventories after two weeks in a row of surprising builds.

API

• Crude -6.799mm (+700k exp)

• Cushing +1.711mm

• Gasoline -6.398mm  (-1.3mm exp) – biggest draw since Sept 2021

• Distillates -1.771mm (+300k exp)

After two weeks of builds, API report crude stocks fell 6.8mm barrels last week – the biggest draw since March. Additionally, gasoline stocks plunged…

Source: Bloomberg

WTI was hovering just above $73 ahead of the API print and extended gains after the data hit…

 “With OPEC+ due to meet in early June, and the market still smarting from the surprise production cut announced in April, there is a risk of another surprise cut in output,” Michael Hewson, chief market analyst at CMC Markets UK, said.

“There has been no indication that OPEC+ is thinking along those lines yet, however there wasn’t in April, so it pays to be cautious.”

Crude has retreated by about 9% so far this year as China’s lackluster recovery since the lifting of Covid restrictions with funds at their least bullish in decades based on CFTC data.