Oil Extends Rally Led by Saudi Warning

Oil rose for a third day as a bullish US stockpile report propelled a rally led by Saudi Arabia’s warning to short sellers.

West Texas Intermediate futures settled above $74 a barrel, closing Wednesday at the highest level since early May. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told speculators earlier this week to “watch out,” which some interpreted as a signal that OPEC and its allies may be considering another output cut ahead of its meeting next week. Meanwhile, US crude inventories fell the most since November, a government report showed.

However, the continuing standoff over debt ceiling talks in Washington, which has weighed heavily on broader financial markets, continues to cap crude’s rise. House Speaker Kevin McCarthy said late Tuesday the two parties had yet to reach a deal to avert a first-ever default.

Despite the recent rally, oil is still down around 7% for the year as traders grapple with China’s lackluster post-Covid economic recovery, interest-rate hikes from the Federal Reserve and the US debt conundrum. Russian exports have also remained robust, despite pledges to cut production in retaliation for Western sanctions.

Prices:

• WTI for July delivery rose $1.43 cents to settle at $74.34 a barrel in New York.
• Brent for the same month gained $1.52 cents to settle at $78.36 a barrel.