Oil Rises after OPEC’s Warning to Stick to Quotas
Oil prices rose for a fourth day in a row in energy commodities on Friday. This has put crude on track for a weekly gain of about 10%. This comes after Saudi Arabia pressing allies to stick to production quotas and banks including Goldman Sachs predict a supply deficit.
Brent crude (LCOc1) rose 18 cents at $43.48 a barrel by 0756 GMT. U.S. oil futures (CLc1) also rose 17 cents to $41.14.
Both contracts are set for their strongest weekly gains since June after Hurricane Sally cut U.S. production. Also, after OPEC and its allies laid out steps to address market weakness.
Goldman Sachs predicted the market would be in a deficit of 3 million barrels per day (bpd) by the Q4. It reiterated its target for Brent to reach $49 by the end of 2020 and $65 by Q3 of 2021.
Swiss bank UBS also warned of the possibility of undersupply in the oil market. It forecast Brent would rise to $45 a barrel in Q4 and $55 by mid-2021.
A tropical depression in the western part of the Gulf of Mexico could become a hurricane in the coming days. This is potentially threatening more U.S. oil facilities.
Energy Minister Warns Those who Gamble on Oil Prices
Commodity news reported the Saudi Arabian energy minister warned those who gamble on oil prices would be hurt like hell.
The Organization of the Petroleum Exporting Countries and other producers in OPEC+ are cutting 7.7 million bpd of output. The group warned at a meeting on Thursday that it would take action against members not complying with the deal.
RBC analysts said they think OPEC+ will put on hold plans to taper the cut down to 5.8M bpd. That’s when the entire group convenes again in December.
In the Gulf of Mexico, drillers offshore and exporters began a clear-up on Thursday. This was after Hurricane Sally weakening to a depression and started rebooting idle rigs following their closure for five days.
Meanwhile, in precious metals, a strong rebound in Chinese car sales is helping to widen the price gap between palladium. This is already the most expensive of the major precious metals, with its sister metal platinum.
COMMENTS