The U.S. Energy Information Administration reported on Wednesday that U.S. oil inventories fell by about 12.5 million barrels last week, compared with expectations for an increase of about two million barrels.

It reported a 2.1 million barrel drop in gasoline stocks in the U.S., and a 0.6 million barrel drop in distillate stocks.

Oil prices rose on Wednesday, driven by a decline in US inventories and a warning from the Saudi energy minister about the possibility of further OPEC+ production cuts.

Brent crude was up $1.39, or 1.81%, at $78.23 a barrel, while US West Texas Intermediate crude was up $1.44, or 1.98%, at $74.35.

Saudi oil minister warns speculators

“Short sellers, those betting that prices will go down, should watch out for the pain,” the Saudi energy minister said on Tuesday.

Some investors took this as a sign that “the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, may consider further production cuts at a meeting on June 4.”

Under the weight of broader markets, another round of debt ceiling talks ended on Tuesday, with no signs of progress as a deadline for the government to raise the borrowing limit or repay the default risk loomed.

A source familiar with the matter said: “Negotiators for Democratic President Joe Biden and Republican President Kevin McCarthy are expected to meet Wednesday morning.” (agencies)