Oil prices lifted on Friday, heading for an almost 9% weekly gain following Saudi Arabia’s move to talk allies into complying with production quotas and banks including Goldman Sachs saw an output shortfall.
On Thursday, Bonny Light, Nigeria’s principal oil grade, went up by $1.75 or 4.30% to $42.48 at 11:00 West African Time while Qua Iboe, another key national crude offering, advanced by $2.08 or 5.11% to $42.78 per barrel.
Brent and WTI are gearing up for their biggest weekly appreciation since early June after Hurricane Sally depleted United States output and the Organisation of the Petroleum Exporting Countries (OPEC) and its allies unveiled ambition to tackle market weakness.
Gold Man Sachs projected a market deficit of 3 million barrels per day (bpd) in the last three months of 2020 and restated its forecast for Brent to attain $49 by year end and $65 by third quarter 2021.
Swiss Bank USB similarly noted that undersupply may happen, expecting Brent to touch $45 per barrel in the fourth quarter and $55 by mid-2021.
OPEC and its Russia-led allies, a cartel known by “OPEC+” are scaling back supply by 7.7 million bpd and emphasised at a Thursday conference it would sanction members breaching output cut agreement.
According to Saudi Arabian energy minister, those speculating on oil would be hurt “like hell.”
RBC analysts said “we think (OPEC+) will put on hold plans to taper the cut down to 5.8 million bpd … when the entire group convenes again in December.”
U.S. producers have started operations in the Gulf of Mexico after a five-day shutdown induced by Hurricane Sally.
A tropical depression in the western part of Gulf of Mexico might metamorphose into a hurricane soon, potentially threatening more oil facilities.
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