Oil prices jumped over 1 percent on Monday after long-time bear Goldman Sachs said the market had ended nearly two years of oversupply following global oil disruptions and flipped to a deficit.
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Brent North Sea crude reached $48.90 a barrel and United States benchmark West Texas Intermediate (WTI) achieved $47.19 – the highest levels since early November.
In Asian trading on Friday, Brent crude futures have increased by 0.59% to $49.10 per barrel, while WTI crude futures expanded by 0.81% to $48.55 a barrel. U.S. West Texas Intermediate crude futures were 16 cents lower at $48.15 a barrel.
Nigerian crude output is down 300,000 barrels a day from the start of the year at 1.6 million barrels a day, the lowest in 22 years, Barclays said in note.
Prices have shot up after USA banking giant Goldman Sachs this week said that supply disruptions in Africa’s biggest oil producer Nigeria, along with increased demand, had created a surprising short-term supply deficit.
At the same time, supply disruptions in Canada are taking longer than expected to come back on line. According to the EIA, output from shale producers may decline by around 113,000 barrels per day (bpd) to 4.85 million bpd.
Beside unplanned outages, supply from non-OPEC countries is expected by the International Energy Agency and other forecasters to fall this year and output in some OPEC nations such as Venezuela is suffering because of a cash crunch.
“There was a broad sell-off across commodities as the US-dollar rallied”, said ANZ bank, and added that the stronger dollar should keep downward pressure on commodity prices despite the ongoing supply side issues”.
The rebound has been fueled by declining US crude output, a wildfire that has restricted Canadian oil exports to the U.S and outages in Libyan and Nigerian supply.
Meanwhile, global banker Goldman Sachs has revised its forecast for oil futures in 2016 and 2017 saying that the price of a barrel of oil will likely be around $50 this year and reach $60 by the end of 2017.
Further, a wildfire that broke out in Fort McMurray, Canada dragged crude output to 1.6 million bpd.
Saudi Arabia’s crude oil exports in March, however, fell slightly to 7.541 million bpd from 7.553 million in February, official data showed on Wednesday.
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Oil is still only half its level of mid-2014, when concern about excess supply prompted prices to begin a decline from over US$100, and high inventories have limited the response of prices to the supply disruptions.
