Oil prices rose by about 2% on Wednesday, after a large unexpected drawdown in U.S. crude inventories and a warning from the Saudi energy minister that raised the prospect of further OPEC+ production cuts.
Reuters reports that Brent crude futures rose by $1.40, or 1.8%, to $78.24 a barrel by 10:51 a.m. EDT (1451 GMT) while U.S. West Texas Intermediate crude (WTI) gained $1.48, or 2%, to $74.39.
U.S. crude inventories posted a massive surprise drawdown, falling by 12.5 million barrels last week to 455.2 million barrels, the Energy Information Administration said on Wednesday. Analysts had expected an 800,000-barrel rise.
Fuel stockpiles also fell. U.S. gasoline stocks dropped by 2.1 million barrels in the week to 216.3 million barrels, the EIA said, while distillate stockpiles fell by 600,000 barrels in the week to 105.7 million barrels.
The U.S. Memorial Day holiday, this year on May 29, traditionally marks the beginning of the peak summer travel season and higher fuel demand.
“Refiners are absolutely going max out with refinery runs right now, trying to keep up with demand,” said Phil Flynn, an analyst at Price Futures Group.