Oil prices rose by nearly 2% early on Tuesday after the Saudi energy minister warned short sellers to “watch out” and as seasonal demand for fuel is set to rise at the start of the U.S. driving season this weekend.
As of 9:00 a.m. EDT on Tuesday, WTI Crude, the U.S. benchmark, was up by 1.93% at $73.44. The international benchmark, Brent Crude, traded at $77.29, up by 1.71% on the day.
Earlier on Tuesday, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, warned traders, again, against shorting oil futures, less than two weeks before the OPEC+ panel on production policy meets on June 4.
Considering that OPEC+ wrong-footed short sellers when it announced a surprise production cut in early April, today’s comments from the most important oil official in the world’s top crude oil exporter shouldn’t be dismissed, analysts say.
Meanwhile, negotiations on raising the U.S. debt ceiling continue after President Joe Biden and House Speaker Kevin McCarthy said on Monday that they had “productive” talks. President Biden said all agreed that “default is not really on the table.”
Oil speculators might be wary of carrying too many shorts into the next OPEC+ meeting on June 4, according to ING strategists Warren Patterson and Ewa Manthey.
“Positioning data shows that there is still a sizeable gross short in ICE Brent, however, these shorts will want to be careful as we approach the next OPEC+ meeting, which is scheduled for 4 June. OPEC+ have surprised the market a couple of times recently, so market participants may be reluctant to carry too much risk into this meeting,” they said on Tuesday.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, commented early on Tuesday,
“Speculators have recently increased their gross short position in WTI and Brent to near the level that was seen prior to the April 2 OPEC+ production cut, and with the Saudi Energy Minister once again telling speculators to “watch out” some (short sellers) may have second thoughts.”
By Michael Kern for Oilprice.com
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