Oil prices remained unchanged on Friday, following the rumors coming from Libya that the blockade of the country’s oil exports will be lifted for a month and the signals at the OPEC + meeting that compliance with production quotas will be backed by serious inspections and sanctions.
The blockade reduced Libyan production from the previous 1.2 million barrels to 100,000 barrels a day now. Market sentiment dropped on Friday after the announcement that the blockade on oil production in Libya would be lifted for a month. It is unclear how quickly Libya can increase production.
Thursday’s panel also emphasized that the Organization of Petroleum Exporting Countries and its allies underlined the importance of crude oil prices as better adaptation to oil production cuts. The Alliance showed strength and assured the market that if further action is required to discipline and stabilize the market, this will happen.
Both Brent and WTI crude oil indicators recorded weekly increases after Saudi Arabia pressured allies to adhere to production quotas, Hurricane Sally lowered US production and banks predicted a supply deficit.
Brent LCOc1 fell 15 cents to settle at $43.15 a barrel, but rose 8.3% for the week. West Texas Intermediate (WTI) oil futures CLc1 rose 14 cents to settle at $41.11 a barrel, and gained 10.1% for the week.
Oil futures were also followed by drastically falling US stock indices. Concerns remain that the demand might get worse.
According to an OPEC + source, Saudi Arabia said in a statement Thursday that the OPEC + producer group could hold an extraordinary meeting in October if the oil market disrupted due to weak demand and rising coronavirus cases.
Some banks projected a market deficit of 3 million barrels per day in the fourth quarter and reiterated Brent’s goal of reaching $ 49 by the end of the year and $ 65 in the third quarter of 2021. Others pointed to the possibility of under-supply, predicting that Brent would rise to $ 45 a barrel in the fourth quarter and $ 55 per barrel in mid-2021.
US producers in the Gulf of Mexico have resumed drilling after a five-day shutdown due to Hurricane Sally.
Tropical stress in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more oil plants.
The number of US oil rigs, indicative of future production, is said to have dropped to 179, the lowest since mid-August with this week’s decline.
It is also said that money managers increased their net long US crude futures and options positions to 308,522 with 30,970 contracts during the week.