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Oil Prices Mixed As OPEC Boost Countered By Libyan Blockade Lift

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 an OPEC meeting on Thursday.

Brent crude was down 17 cents at $43.13 a barrel by 1321 GMT while U.S. oil futures ticked up 6 cents to $41.03.

The benchmarks were still set for weekly gains after Hurricane Sally cut U.S. 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 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 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.

The Organization of the Petroleum Exporting Countries 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, U.S. 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.

 

Source: Reuters

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