May 24 Reuters Oil prices pared their gains on Wednesday but were still solidly bid, after U.S. inventories and fuel supplies tightened and as a warning from the Saudi energy minister to speculators raised the prospect of further OPEC output cuts.

Brent crude futures last rose 74 cents, or 1, to 77.58 a barrel by 0645 GMT, while the U.S. West Texas Intermediate crude WTI gained 84 cents, or 1.2, to 73.75 a barrel.

Brent had earlier rose as much as 1.03 to 77.87 a barrel. WTI had jumped as much as 1.07 to 73.98 a barrel.

Oil is starting to turn bullish after the Saudi threat to shortsellers, said Edward Moya, senior analyst at OANDA, adding that Saudi Arabia will likely do whatever it takes to defend prices.

Fears of a supply squeeze mounted after Saudi Arabia39;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, also known as OPEC, could consider further output cuts at a meeting on June 4.

CMC Markets analyst Tina Teng said in a note on Wednesday that oil prices had jumped on speculation that OPEC may cut output further to keep price stability.

Also boosting oil prices was industry data late on Tuesday which showed that U.S. 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…