Oil climbed to a six-month high this morning, and Goldman Sachs Group Inc. says the market has moved into a deficit earlier than expected due to disruptions in Nigeria and higher demand.
Bloomberg reports futures rose as much as 3.6% in New York. The shift to a supply deficit this month happened one quarter earlier than forecast, Goldman Sachs says in a report. The bank raised its price forecasts, while also projecting a return to surplus early next year. Militant attacks and pipeline disruptions have cut Nigerian volumes by at least 30%, its petroleum minister said last week.
After falling to a 12-year low earlier this year, oil has rebounded on signs the worldwide glut will ease amid production cuts.
West Texas Intermediate for June delivery gained $1.44, or 3.1%, to $47.65 a barrel as of 9:31 a.m. on the New York Mercantile Exchange, the highest since Nov. 4. Prices have climbed more than 75% from this year’s low.
Brent for July settlement rose $1.36, or 2.8%, to $49.19 a barrel on the London-based ICE Futures Europe exchange. The contract also reached the highest level since Nov. 4.
The supply surplus in the first half of the year is proving to be smaller than estimated, the International Energy Agency said last week, citing robust demand in India and other emerging nations. Morgan Stanley, Barclays and Bank of America Merrill Lynch joined Goldman Sachs in noting that supply losses are leading markets to rebalance.
“The oil market looks set on a course for rebalancing much faster than previously expected,” Barclays analysts Miswin Mahesh and Kevin Norrish say in a report. “Fresh catalysts in the form of large and extended supply outages in Nigeria are supporting upward price momentum in oil, just when it seemed about to fade.”
