Oil edges up and is on track for weekly gain

London — Oil prices ticked up on Friday on track for a weekly gain of about 9%, after Saudi Arabia pressed allies to stick to production quotas and banks including Goldman Sachs predicted a supply deficit.

Brent crude was up 14c at $43.44 a barrel by 10am GMT while US oil futures rose 9c to $41.06, having briefly dipped into negative territory.

Both contracts are set for their strongest weekly gains since early June after Hurricane Sally cut US production and oil cartel Opec and its allies (Opec+) laid out steps to address market weakness.

Goldman Sachs predicted a market deficit of 3-million barrels per day (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+ is 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.

The Saudi Arabian energy minister said those who gamble on oil prices would be hurt “like hell”.

“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.

In the Gulf of Mexico, US producers started rebooting idle 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 US oil facilities.

Reuters