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Prices Rise Strongly On Saudi Warning

OIL

Oil rose over 2% on Tuesday as the Saudi energy minister warned short-sellers that OPEC would again take steps to rein in speculators. The cartel next meets June 3-4, where another output cut is possible to support prices. As a result, crude moved higher despite the general pullback in risk across markets following the lack of a resolution to the US debt impasse yesterday.

  • WTI rose 2.4% on Tuesday and has risen again at the start of Wednesday’s trading to around $73.90/bbl. It has broken short-term resistance of $73.81, the May 10 high, and opened up $76.74, the April 28 high. Brent rose 2% to $77.50 and reached a high of 77.74, which broke resistance at $77.60, the May 10 high, after which lies $78.63, the 50-day EMA.
  • Bloomberg is reporting that there was a large drawdown of crude stocks in the US of 6.8mn, according to people familiar with the API data. Gasoline inventories fell 6.4mn, as demand ramps up, and distillate -1.77mn.

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