Oil up sharply as Goldman Sachs says glut is ending
Oil prices jumped more than 2pc yesterday to their highest since November 2015 on the back of more disruption to supplies from Nigeria and after long-time bear Goldman Sachs said it was more positive about the market.
Brent crude futures were trading at $49.05 per barrel by early afternoon, up $1.23 or 2.5pc. US crude futures were up by the same 2.5pc level to $47.44 a barrel.
Supply disruptions have most likely pushed oil production below consumption levels in May for the first time in at least two years, meaning the world has started eating into the huge stockpiles of oil which had knocked as much as 70pc off prices between 2014 and early 2016.
The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which warned not too long ago that oil could go as low as $20 per barrel.
"The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman said.
"The market likely shifted into deficit in May... driven by both sustained strong demand as well as sharply declining production," the investment bank said.
However, Goldman cautioned that the market would flip back into a surplus in the first half of 2017 and forecast prices of around $50 per barrel by the end of this year.
In Nigeria, output has fallen to its lowest in decades following several acts of sabotage.
In the Americas, US officials warned they were increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices, where crude production has also been falling due to power shortages. (Reuters)