Oil prices rise after OPEC meets; Libyan developments limit gains
Oil prices edged higher on Friday, bolstered by bullish signals from the recent OPEC meeting, but gains were limited after a Libyan commander said a blockade on the country's oil exports would be lifted for a month.
Both U.S. crude and Brent were set for weekly gains after Saudi Arabia pressed allies to stick to production quotas, Hurricane Sally cut U.S. production, and banks including Goldman Sachs predicted a supply deficit. Brent was set for a weekly rise of 9%, and WTI was on track to rise 11%.
Brent crude was up 1 cent to $43.31 a barrel by 11:20 a.m. EDT (1520 GMT), while U.S. oil futures rose 26 cents to $41.23 a barrel.
Prices retraced some gains after eastern Libyan commander Khalifa Haftar announced he would lift his blockade of oil output for one month. The blockade slashed Libyan production to just over 100,000 barrels per day (bpd) now from around 1.2 million bpd previously.
It was unclear how quickly Libya could ramp up production.
On Thursday, the key panel for the Organization of the Petroleum Exporting Countries and its allies pressed for better compliance with oil output cuts against the backdrop of falling crude prices.
Saudi Arabia's Prince Abdulaziz bin Salman told a gathering on Thursday that the OPEC+ producer group could hold an extraordinary meeting in October if the oil market soured because of weak demand and rising coronavirus cases, according to an OPEC+ source.
"The alliance showed strength and reassured the market that if further action will be needed to discipline sub-compliers and balance the market, it would be taken," said Bjornar Tonhaugen, Rystad Energy's head of oil markets.
Goldman Sachs predicted a market deficit of 3 million bpd by the fourth quarter and reiterated its target for Brent to reach $49 by year end and $65 by the third quarter of 2021.
Swiss bank UBS also pointed to the possibility of under supply, forecasting Brent would rise to $45 a barrel in the fourth quarter and to $55 by mid-2021.
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.
(Reporting by Stephanie Kelly; additional reporting Shadia Nasralla and Aaron Sheldrick; editing by David Gregorio, Louise Heavens and Elaine Hardcastle)
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