New storm in Gulf of Mexico threatens oil market deficit

Oil prices rose for the fourth consecutive session yesterday, as Goldman Sachs estimates that the market is in a deficit with the start of a new storm forming in the Gulf of Mexico, putting crude on the path of achieving a weekly gain of about 10 percent.

According to "Reuters", Brent crude rose 27 cents, or 0.6 percent, to $ 43.57 a barrel, while US crude futures gained 23 cents, or 0.6 percent, to $ 41.20 a barrel, by 0510 GMT.

The two benchmarks fell at the beginning of the session, but rose strongly this week after Hurricane Sally cut US oil production, and OPEC and its allies offered steps to counter the 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 stocks, that would have indicated that the market is experiencing an oversupply.

Analysts at the American Foundation confirmed that according to estimates, the oil market is still in a deficit situation with speculative positions currently at very low levels. ”The Investment Bank expects the market deficit to reach three million barrels per day in the last quarter of the year, and confirmed that its target for Brent will be 49 $ 65 by the end of the year and $ 65 by the third quarter of next year.

In the meantime, 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.

Prince Abdulaziz bin Salman, the Saudi Minister of Energy, warned dealers against betting on the decline of the oil market and promised those who gamble on the price of oil that they will regret. Prince Abdulaziz bin Salman’s statements came after a remote meeting of a main committee of the OPEC+ group that includes OPEC. And allies led by Russia.

OPEC+ said yesterday 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 coronavirus.

He revealed that he had received compensation pledges from countries that failed to commit to reducing production, but requested some time until the end of next December in order to reach full compliance with the production cut, pointing out that the volume of compensation for this month amounts to 2.4 million barrels per day.

He pointed out that "any moves or data that question our commitment and determination would send a wrong signal and undermine the stability of the market," stressing that being transparent with markets and with the "OPEC+" group regarding production and the compliance rate always pays off. He said, "When we faced cases of increasing production more than planned, we took the option of compensation to ensure justice and coherence between the countries of the group," adding, "We must demonstrate the extent of our activity, our proactive work and our willingness to act when required."

In addition, Ihsan Abdul-Jabbar, the Iraqi Minister of Oil, revealed that the percentage of crude oil-producing countries' commitment to the agreement to reduce production for the month of August reached 102 percent, once again the keenness of the oil-producing countries from within OPEC and the producers allied with it from outside the organization to abide by the agreement to reduce Production.

The Iraqi minister stressed in a press statement after the conclusion of the 22nd meeting of the Joint Ministerial Monitoring Committee of the Organization of Petroleum Producing Countries (OPEC) and the countries allied with it through a closed circuit of television, the need to work to achieve the goal of stability and balance in global oil markets, in order to reach the planned goals in light of challenges Facing the oil market due to the spread of the Corona virus. "

He said, "The ministerial committee welcomed the commitment of OPEC producing countries and those allied with it to the agreement to reduce production, as the percentage of commitment for the month of August, according to independent secondary sources, reached 102 percent, which is a good percentage that positively affects the reality of the oil market."

He explained that during the meeting, it was stressed that the producers would fully adhere to the agreement, according to the announced percentages, and compensate the unreduced quantities for the past period.

For his part, Alaa al-Yassiri, Director General of the Iraqi Crude Oil Marketing Company SOMO, said, "The OPEC meeting dealt with reviewing the monthly report prepared by the Joint Technical Committee, and discussed developments in the oil market for the period that followed the previous meeting, which was held on August 19. The past and discuss the expectations for the last quarter of the current year 2020. "

He added, "The production rates for the month of last August were reviewed by the producing member states and those allied with them from outside OPEC, and it was agreed to hold a ministerial meeting during the period from 15 to 19 October next."

On Wednesday, the US Energy Agency announced a decrease in commercial stocks in the United States by about 4.4 million barrels during the week ending September 11, in the seventh weekly decline in the last two months, contrary to experts' expectations, a rise of about 2.1 million barrels.

According to those data, the total commercial inventories in the United States decreased to about 496 million barrels, which is the lowest level since the week ending April 3, in a positive sign of the acceleration of withdrawal levels in the largest consumer of oil in the world.

US oil production increased last week by about 900 thousand barrels per day, bringing total production to about 10.9 million barrels per day, in the second consecutive weekly increase, thanks to the naturally re-pumping of supplies from the Gulf of Mexico after the end of a wave of hurricanes and storms.

On the other hand, the OPEC basket of crude rose to 41.29 dollars a barrel on Wednesday, compared to 39.35 dollars a barrel the previous day. The daily report of the Organization of Petroleum Exporting Countries (OPEC) said Thursday that the price of the basket, which includes the average prices of 13 crude produced by the member states of the Organization, achieved its second consecutive rise, and that the basket gained about two dollars, compared to the same day last week, in which it was recorded. $ 39.82 a barrel.