A tanker truck is loaded in Hungary
A tanker truck is loaded in Hungary. Also underpinning the oil market yesterday was a surprise drop in US crude inventories. Image Credit: Bloomberg

London: Oil rose for a second day on Wednesday, buoyed by an unexpected decline in US crude inventories and after Saudi Arabia appeared undaunted by pressure from US President Donald Trump on Opec to prevent steeper price rises.

Saudi Energy Minister Khalid Al Falih said Opec and its partners were “taking it easy” in response to a tweet from Trump on Monday that called on the group to slacken its restrictions on crude production.

“We are taking it easy. The 25 countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost,” Al Falih said in Riyadh when asked to comment on Trump’s tweet, CNBC reported.

The oil price has risen by almost a quarter so far this year, after the Organisation of the Petroleum Exporting Countries, together with other producers such as Russia and Oman, agreed to cut output to avoid the build-up of a global surplus, particularly as US output has boomed.

Brent crude futures were up 67 cents on the day at $65.88 a barrel at 1015 GMT, while US futures were up 75 cents at $56.25 a barrel.

“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.

Based on current market data, the so-called Opec+ group is “likely to continue with the production cuts until the end of the year”, a Gulf Opec source told Reuters on Tuesday.

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.

Also underpinning the oil market on Wednesday was a surprise drop in US crude inventories, which fell by 4.2 million barrels in the latest week, according to the American Petroleum Institute. This compared with forecasts in a Reuters survey for a rise of 2.8 million barrels.

Official data will be released by the US Energy Information Administration (EIA) after 1800 GMT on Wednesday.

“Crude oil futures bounced as Opec members remained firm on planned production cuts despite heightened political pressure from US President Trump early this week,” said Benjamin Lu of Singapore-based brokerage Phillip Futures.