Oil prices gained on Wednesday after US oil and fuel supplies tightened and as a warning from the Saudi energy minister to speculators raised the prospect of further OPEC+ output cuts.

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Brent crude futures rose 86 cents, or 1.1 percent, to $77.70 a barrel by 0007 GMT, while the US West Texas Intermediate crude (WTI) gained 88 cents, or 1.2 percent, to $73.79 a barrel.

Industry data late Tuesday showed US crude oil and fuel inventories fell sharply.

Crude inventories fell by about 6.8 million barrels in the week ended May 19, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories dropped by about 6.4 million, while distillate inventories declined by about 1.8 million.

If data from the Energy Information Administration, due on Wednesday, confirm the API figures, U.S. gasoline inventories would have declined for the third straight week to their lowest pre-Memorial Day levels since 2014.

The Memorial day holiday, this year on May 29, traditionally marks the beginning of US peak summer travel.

Meanwhile, production cuts by some OPEC+ members take effect this month. Fears of a supply squeeze mounted after Saudi Arabia's energy minister said he would keep short sellers — those betting that prices will fall — "ouching" and told them to "watch out."

Some investors took that as a signal that the Organization of Petroleum Exporting Countries and allies including Russia could consider further output cuts at a meeting on June 4.

Elsewhere, markets were still wary about US debt ceiling discussions which in turn tempered oil price gains. Another round of debt ceiling talks ended on Tuesday with no signs of progress as the deadline to raise the government's $31.4 trillion borrowing limit or risk default ticked closer.

Also Read: Asian equities drop as debt impasse fuels caution

First Published:May 24, 2023 7:37 AM IST