Oil mixed as OPEC boost countered by Libyan problem

Crude benchmarks set for weekly gains after Riyadh asked allies to stick to quotas

LONDON:

Oil prices were mixed on Friday after Libyan commander Khalifa Haftar said a blockade on Libyan oil exports would be lifted for one month, countering more bullish signals from a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) on Thursday.

Brent crude LCOc1 was down $0.17 at $43.13 a barrel by 1321 GMT while US oil futures CLc1 ticked up $0.06 to $41.03.

The benchmarks were still set for weekly gains after Hurricane Sally cut US production, Saudi Arabia pressed allies to stick to production quotas and banks including Goldman Sachs predicted a supply deficit.

Pre-blockade Libya was producing around 1.2 million barrels per day (bpd), compared with just over 100,000 bpd now. It is unclear how quickly Libya could ramp up production.

Earlier, Goldman Sachs predicted a market deficit of three million bpd by the fourth quarter and reiterated its target for Brent to reach $49 by the end of the year and $65 by the third quarter of 2021.

Swiss bank UBS also pointed to the possibility of undersupply, forecasting Brent would rise to $45 a barrel in the fourth quarter and to $55 by mid-2021.

OPEC and other producers, a group known as OPEC+, are cutting output by 7.7 million bpd and stressed at a meeting on Thursday that it would take action against members not complying with the deal.

“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,” RBC analysts said.

Saudi Arabia said an earlier meeting was possible if oil prices fell alongside demand because of a second wave of coronavirus cases.

“The market now feels the ground more stable to maintain $40+ price levels,” said Rystad’s Head of Oil Markets Bjornar Tonhaugen.

In the Gulf of Mexico, US producers started rebooting rigs following a five-day closure due to Hurricane Sally.

A tropical depression in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more oil facilities.