Oil rises as Opec ignores Trump and curbs supply

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 oil cartel 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,” 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 Opec, 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 67c on the day at $65.88 a barrel at 10.15am GMT, while US futures were up 75c at $56.25 a barrel.

“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-plus 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 that 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 (API). 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 6pm GMT on Wednesday.

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

Reuters