Oil is Rising as Goldman Forecasts a Deficit and a Possible New Storm in The Gulf of Mexico

Oil prices rose for the fourth session in a row as Goldman Sachs estimates that the market is in a deficit and a new storm has begun to form in the Gulf of Mexico, putting crude on the path of achieving a weekly gain of about 10%.

After the Tokyo Stock Exchange closed, Brent crude rose 27 cents, or 0.6%, to $ 43.57 a barrel, while U.S. crude futures gained 23 cents, or 0.6%, to $ 41.20 a barrel.

The two benchmarks fell at the start of the session but rose strongly this week after Hurricane Sally cut US oil production, and OPEC and its allies offered steps to counter market weakness.

Goldman Sachs said in a new report that the recent stockpiling of crude oil on board of forward delivery oil tankers “is driven by temporary dynamics of stock allocation” and not an increase in global inventories that would have indicated that the market is experiencing an oversupply.

“According to our estimates, the oil market is still in a deficit situation with speculative positions currently at very low levels,” Goldman Sachs analysts said.

The investment bank expects that the market deficit will reach three million barrels per day in the last quarter of the year, and confirmed that its target for Brent will be $ 49 by the end of the year and $ 65 by the third quarter of next year.

Meanwhile, a tropical depression is forming in the western part of the Gulf of Mexico and may become a hurricane in the next few days, which may threaten US oil installations.

The Saudi Energy Minister also warned dealers against betting on the decline in the oil market and promised those who gamble on the price of oil that they will regret it.

The statements of Prince Abdulaziz bin Salman, who is the most influential minister within OPEC, came after a remote meeting of the main committee of the OPEC+ group that includes OPEC and allies led by Russia.

OPEC + said yesterday, Thursday, that the group will take measures against members who are not committed to large production cuts aimed at supporting the market following the decline in fuel demand due to the Corona virus.