Commodity Market: US Crude Oil hits a two-week high as Goldman Sachs forecasts supply deficit

Futures on US West Texas Intermediate Crude Oil extended gains from the prior three trading days and hit a two-week high on Friday after a report by Goldman Sachs stated the oil market was in deficit.

Additionally supporting prices, a new tropical depression began to develop in the western part of the Gulf of Mexico, which could transform into a hurricane during the upcoming several days, posing another threat to offshore oil facilities after Hurricane Sally had already caused a shutdown of some US output.

In its latest report, Goldman Sachs noted that recent crude storage on oil tankers for future delivery was “driven by transient inventory allocation dynamics” rather than a surge in global supply.

“We estimate that the oil market remains in deficit with speculative positioning now at too low levels,” Goldman Sachs stated in the report.

According to the Wall Street bank’s forecast, the oil market will be in a deficit of 3 million barrels per day by Q4 of 2020.

Meanwhile, at its virtual meeting on Thursday, the OPEC+ group said that actions would be taken on members that fail to comply with the agreed output cuts, aimed to support oil prices after a pandemic-induced drop in demand.

As of 9:08 GMT on Friday WTI Crude Oil Futures were gaining 0.51% to trade at $41.18 per barrel, after earlier touching an intraday high at $41.72, or its strongest level since September 4th ($41.87). WTI Crude Futures have retreated 3.38% so far in September, following four straight months of gains.

Brent Oil Futures were gaining 0.30% on the day to trade at $43.40 per barrel, after earlier touching an intraday high at $43.78, or a price level not seen since September 4th ($44.52). Brent Oil Futures have dropped 4.74% so far in September, following five straight months of gains.

Daily Pivot Levels (traditional method of calculation) – WTI Crude Oil Futures

Central Pivot – $40.54
R1 – $41.65
R2 – $42.34
R3 – $43.45
R4 – $44.57

S1 – $39.85
S2 – $38.74
S3 – $38.05
S4 – $37.37

Daily Pivot Levels (traditional method of calculation) – Brent Oil Futures

Central Pivot – $42.76
R1 – $43.99
R2 – $44.72
R3 – $45.95
R4 – $47.19

S1 – $42.03
S2 – $40.80
S3 – $40.07
S4 – $39.35