Oil price after warnings from Saudi Arabia. Brent at a three-week high

Brent crude futures jumped to $78 a barrel on Wednesday, rising for the third straight session to a three-week high. The price of oil rose after a warning from the Saudi energy minister fueled fears of further OPEC+ production cuts.

The price of oil rose after comments from Saudi Arabia

Saudi Arabia's Crown Prince Abdulaziz bin Salman referred to oil speculation and made it clear that for speculators to "believe", which analysts perceived in turn as a signal that OPEC + may consider further output cuts at a meeting on June 4. At the end of March and beginning of April, OPEC surprised by cutting production, which led to a spike in oil prices in early April. Back then, a barrel of Brent cost $85,25. However, concerns about a US economic slowdown later in the year seemed to have subsided effectively push oil prices down below the level of recent OPEC action.

A surprising drop in crude oil inventories

Meanwhile, industry data showed that U.S. crude inventories fell by about 6,8 million barrels last week, against forecasts for an increase of 0,525 million. Gasoline inventories also fell by about 6,4 million, while distillate inventories fell by about 1,8 million.

These figures appeared before Memorial Day, which traditionally marks the beginning of the summer travel peak in Usa. Elsewhere, investors continued to monitor the US debt ceiling negotiations as there was little sign of progress, even with a default risk estimated for early June.

Positioning of speculators on the oil market

According to the data of the US CFTC commission and the COT report, speculators on WTI oil contracts had before OPEC intervention most short positions from October 2021. The intervention at the turn of March and April effectively drove some of them out of the market, which resulted in a drop in shorts from 148999 contracts to 74365 in mid-April. Speculators now appear to be shorting again as they have risen to 136502 contracts as of May 16. Perhaps that is what OPEC is currently targeting.

Oil market technical analysis

Price oil since the end of last year it seems to be in a sideways trend between the levels of USD 87,6 and USD 75,5 for a barrel of Brent. In March, however, on the occasion of the banking panic, the price of oil plunged from around USD 71, which could be potential spring. The retest took place in May, and the USD 71,40 area was again defended.

Chart - oil price: May 24.05.2023, XNUMX

It seems that until these levels are broken, the price of oil, with or without the help of OPEC, may try to recover towards USD 87,60.