Oil pulls back from 2-week high on profit-taking

Oil prices turned lower as the US market opened on Friday, after hitting a 2-week high earlier today, but still on the cusp of the first weekly gain in 3 weeks, thanks by Goldman Sachs’s estimates of a deficit in market during the fourth quarter, the OPEC Plus collation's statements about compliance to the output cut agreement, in addition to a drop in the US crude inventories.

The US crude 1.0% to $40.53 a barrel, after opening at $40.93, after it hit a session-high and the highest since September 4 at $41.46, and Brent fell 1.1% to $42.76, after it opened at $43.22, after hitting the highest since September 4 at $43.78.

The US crude jumped 2% yesterday, and Brent crude futures gained 2.3%, posting their third straight daily gain, The US Energy Administration weekly report. 

Oil prices are still on the cusp of gaining 8% so far during this week, the first weekly gain in 3 weeks, and the largest since last June.

Goldman Sachs said in its new energy market report that the recent storage of oil tankers of crude for future delivery was driven by transient inventory allocation dynamics rather than an increase in world shares that will indicate the market is oversupplied.

The American bank added "we estimate that the oil market remains in deficit with speculative positioning now at too low levels."

The bank estimated that the oil market would see a deficit of 3 million barrels per day in the fourth quarter, and expected Brent to reach $49 a barrel by the end of this year, and to reach $65 by the third quarter of 2020.

OPEC-Plus coalition stressed on Thursday that the group will take action on members who do not comply with their quotas of the output cut agreement.

The global coalition is implementing the second phase of the cut agreement, cutting about 7.7 million bpd until the end of December.

The US Energy Administration reported on Wednesday a drop in commercial inventories by 4.4 million barrels during the week ending September 11, beating estimates of a drop by 2.1 million.

Total inventories tumbled to 496 million barrels, the lowest since April 3 in a positive sign for US demand.