Oil futures jumped more than 2 per cent overnight after US crude inventories unexpectedly plunged and as top OPEC producer Saudi Arabia appeared unfazed by pressure from US President Donald Trump to prevent oil prices from rising.
Crude inventories fell 8.6 million barrels last week, compared with analysts’ expectations for an increase of 2.8 million barrels, the US government reported.
US crude net imports fell to an all-time low of 2.6 million barrels per day amid declining OPEC production and US sanctions against Venezuela, while exports held close to record highs above 3 million bpd.
‘The inventory decline was notable as the refinery run rate remains subdued due to some seasonal turnarounds,’ said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.
‘It was the result of a plunge in crude oil imports, along with crude oil exports hovering near a record level.’
Brent crude futures rose $US1.37, or 2.1 per cent, to $US66.58 a barrel.
US futures were up $US1.76, or 3.2 per cent, to $US57.26.
Saudi Energy Minister Khalid al-Falih said the Organisation of the Petroleum Exporting Countries and its partners were already ‘taking it easy’ in response to a tweet from Trump on Monday, who told the group to ‘relax’ on production cuts.
‘The 25 countries are taking a very slow and measured approach’ Falih said in Riyadh when asked to comment on Trump’s tweet, CNBC reported.
‘Just as the second half of last year proved, we are interested in market stability first and foremost.’
Falih said OPEC and non-member producer allies, known as OPEC+, may need to extend its agreement to curb output until the end of 2019.
Also in Riyadh, OPEC Secretary General Mohammed Barkindo commented that managing world supply is difficult when two members – Iran and Venezuela – are under sanction from the United States.
Oil prices have risen more than 20 per cent so far this year after OPEC+ agreed to cut output to avoid the build-up of a global surplus particularly as US crude production booms.
US crude production set record highs for two straight weeks, hitting 12.1 million bpd last week, according to government data.
Russian energy minister Alexander Novak also said this week the oil market was more or less stable and price volatility, which is unwelcome to both producers and consumers, was low.
‘Donald Trump tweeted and OPEC replied. It was not the message he wanted to hear, so the story is not over yet,’ PVM Oil Associates strategist Tamas Varga said.