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Oil rises after OPEC warn members to stick to quotas

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Organization of the Petroleum Exporting Countries (OPEC) office. Photo: PASTORDAY


Oil prices rose for a fourth day in a row on Friday, putting crude on track for a weekly gain of about 10 per cent, after Saudi Arabia pressed allies to stick to production quotas and banks, including Goldman Sachs, predicted a supply deficit.

Brent crude was up 18 cents at $43.48 a barrel by 0756 GMT while U.S. oil futures rose 17 cents to $41.14.

Both contracts are set for their strongest weekly gains since early June after Hurricane Sally cut U.S. production while OPEC and its allies laid out steps to address market weakness.

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Goldman Sachs predicted the market would be in a deficit of three 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 in the oil market, forecasting Brent would rise to $45 a barrel in the fourth quarter and $55 by mid-2021.

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

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

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The Organisation of the Petroleum Exporting Countries (OPEC) and other producers in OPEC+ are cutting 7.7 million bpd of output and the group 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.

In the Gulf of Mexico, U.S. offshore drillers and exporters began a clear-up on Thursday after Hurricane Sally weakened to a depression and started rebooting idle rigs following their closure for five days.

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