Oil, which is known as one of the main commodities in global trade, has a slightly different track record with gold lately. You must know that in recent times gold has indeed shown a downward trend for various reasons.
One of the reasons for that decline is because the dollar is strengthening several days ago. In contrast to these metals, oil is currently experiencing an increase in price. Oil prices rose for the fourth day in a row this Friday.
This situation puts the crude product on track for a weekly gain of around 10%. Previously, it was known that oil prices had experienced a decline. It is caused by natural disasters such as storms that occur in several regions and for sure the pandemic.
In addition, the coronavirus pandemic also made oil stocks excess. Now, this commodity is reversing the situation and has succeeded in making the price increase. Mostly, it is supported by the rules and warning made by OPEC. It seems that this strategy is effective.
Steps Taken by Saudi Arabia
Crude oil prices have increased after Saudi Arabia pressured allies to stick to production quotas they have. According to the data, Brent crude was up 18 cents to $ 43.48 a barrel. On the other hand, US futures were up 17 to hit the $ 41.14 mark.
The two contracts are set to be one of the strongest increases since early June. It is for sure that this situation occurred after Hurricane Sally cut the production of the US, OPEC, and its allies. Therefore, these parties establish steps to overcome market weaknesses.
Goldman Sachs estimates the market will experience a deficit of 3 million barrels per day (BPD) in the fourth quarter. This can reaffirm its target for Brent to reach $ 49 by the end of the year and $ 65 in the third quarter of 2021.
The Swiss bank UBS also pointed to a possible supply shortage in the oil market. Conditions like these are what will predict Brent rising to $ 45 per barrel in the fourth quarter and $ 55 in mid-2021. This figure is still not sure depending on market conditions.
Possible Storm that May Happen
Meanwhile, the tropical depression in the western part of the Gulf of Mexico could become a hurricane in the coming days. If this happens, then the storm has the potential to threaten more existing facilities in the US and maybe other areas.
Saudi Arabia's energy minister said those who bet on oil prices would be hurt. Proverbial, this situation will feel "like hell". The Organization of the Petroleum Exporting Countries (OPEC) and other producers in OPEC+ cut 7.7 million barrels per day for production.
This step is important to maintain prices. On the other hand, the group also stressed at last Thursday's meeting that they will take action against members who do not comply with the agreement. The discipline of all OPEC+ members is considered very important.
Activities Start to Normal after Hurricane Sally
Many think that (OPEC+) will postpone plans to lower the decline to 5.8 million barrels per day. It is especially when the whole group met again in December this year. This is an opinion that was also shared by an RBC analyst. It hopes that this commodity price cans stabile again.
It was known that Hurricane Sally happened some time ago. Hurricanes and natural disasters like this can indeed affect world oil prices. Why? It is because storms can disrupt activities in making this product. It is related to the production and stock.
In the Gulf of Mexico, US offshore drillers and exporters kicked off their activity on Thursday after Hurricane Sally weakened. They began rebooting idle rigs after a five-day shutdown and break. It means that production can be increased again soon.
