In spectacular fashion, crude oil traders went from discussing bearish factors such as storage containment issues to celebrating forecasts calling for supply shortages, in less than a week.
U.S. West Texas Intermediate moved higher for a fourth session on Friday, putting it on track for a weekly gain of about 10%, after Saudi Arabia pressed allies to stick to production quotas and banks including Goldman Sachs predicted a supply deficit.
WTI crude oil is set for its strongest weekly performance since early June after Hurricane Sally cut U.S. production and OPEC and its allies laid out steps to address market weakness.
Lower Gulf of Mexico Production and another Tropical Storm Brewing
In the Gulf of Mexico, U.S. offshore drillers and exporters began a “clear-up” on Thursday after Hurricane Sally weakened to a depression and started rebooting idle rigs following their closure for five days.
Meanwhile, a tropical depression in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more U.S. facilities.
OPEC+ Leaders Strongly Urge Compliance
The Organization of the Petroleum Exporting Countries (OPEC) and other producers in OPEC+ are currently cutting 7.7 million bpd of output and the group stressed at a meeting on Thursday that it would take action against members not complying with the deal. This news is leading some traders to speculate that OPEC+ will put on hold plans…