Oil prices rise as much as $1 on concerns over tightening supply

Oil prices pared their gains on Wednesday but were still solidly bid, after U.S. inventories and fuel supplies tightened and as a warning from the Saudi energy minister to speculators raised the prospect of further OPEC+ output cuts, Reuters reported.

Brent crude futures last rose 74 cents, or 1%, to $77.58 a barrel by 0645 GMT, while the U.S. West Texas Intermediate crude (WTI) gained 84 cents, or 1.2%, to $73.75 a barrel.

Brent had earlier rose as much as $1.03 to $77.87 a barrel. WTI had jumped as much as $1.07 to $73.98 a barrel.

Crude inventories fell by about 6.8 million barrels in the week ended May 19, according to market sources citing American Petroleum Institute (API) figures. Gasoline inventories dropped by about 6.4 million, while distillate inventories declined by about 1.8 million. [API/S]

If data from the Energy Information Administration (EIA), due on Wednesday, confirm the API figures, U.S. gasoline inventories would have declined for the third consecutive week to their lowest pre-Memorial Day levels since 2014.

“If that is confirmed with tomorrow’s EIA report, we could start to see some easing recessionary concerns,” said OANDA’s Moya.

The Memorial Day holiday in the United States, this year on May 29, traditionally marks the beginning of U.S. peak summer travel.

Elsewhere, markets were still wary about U.S. debt ceiling discussions which in turn tempered oil price gains. Another round of debt ceiling talks ended on Tuesday with no signs of progress as the deadline to raise the government’s $31.4 trillion borrowing limit or risk default ticked closer.