By Barani Krishnan
Investing.com - OPEC 2, Donald Trump 1.
Oil prices gushed higher on Wednesday after the latest weekly U.S. data showed a phenomenal slump in domestic crude inventories that validated OPEC's production cuts and its defiance against U.S. President Donald Trump's bid to make the cartel tamp down its market rebalancing.
New York-traded West Texas Intermediate crude was up $1.73, or 3.1%, by $57.23 per barrel by 12:18 AM ET (17:18 GMT).
London-traded Brent rose $1.45, or 2.2%, to $66.81.
The U.S. Energy Information Administration reported that crude oil inventories fell by 8.65 million barrels in the week to Feb. 22 compared to forecasts for a build of 2.84 million.
It was the first U.S. crude stockpile drop in six weeks, coming after relentless production cuts by OPEC. In the previous week to Feb. 15, crude balances had risen by nearly 3.7 million barrels.
Gasoline inventories fell by 1.91 million barrels, compared to expectations for a draw of 1.69 million barrels, the EIA said.
Distillate stockpiles, which include diesel, decreased by 0.3 million barrels, compared to forecasts for a decline of 1.95 million.
The overwhelmingly bullish EIA report followed an equally remarkable response from Saudi Energy Minister Khalid al-Falih to Trump that the enlarged OPEC+ group of 25 oil producing nations led by the kingdom and Russia had no intention of easing up on production cuts so that the two-month rally in oil could cool.
Both WTI and Brent are up more than 30% from Christmas Eve lows, and about 25% or so higher for 2019 after the OPEC+ production cuts announced on Dec. 7 were out carried earnestly from the start of January.
Prior to those supply reductions, crude prices had crashed 40% in the fourth quarter of last year.
While an oversold market had made it easier for oil to rebound this year, another reason for the market's outsize recovery was the Saudis determination to double down on its pledged cuts.
"We are taking it easy," Saudi Energy Minister Falih told CNBC on Wednesday in a wry response to Trump's tweet on Monday that called on OPEC to "please relax and take it easy".
Falih said current analysis indicated OPEC+ may need to extend until the end of 2019 its agreement to curb output. The alliance is to meet again in April to decide further action.
Analysts largely cheered the EIA report.
"It was the result of a plunge in crude oil imports, along with crude oil exports hovering near a record level, over 3 million barrels per day," said John Kilduff, founding partner at New York energy hedge fund Again Capital.
But some remain skeptical of the longer term.
"Time will tell if this rate of weekly stockpile declines will continue and U.S. crude production continues to set a new record of 12.1 million barrels per day, threatening to offset the aggressive Saudi cuts," said Tariq Zahir, founder of oil-focused New York oil fund Tyche Capital Advisors.