Daily Times

SINGAPORE/LONDON: Oil prices jumped over 2 percent on Monday to their highest since November 2015 on growing Nigerian oil output disruptions and after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit.

Brent crude futures were trading at $48.71 per barrel at 0836 GMT, up 88 cents, or 1.8 percent, having risen earlier by as much as 2 percent.

US crude futures were up 85 cents, or 1.8 percent, at $47.06 a barrel. Supply disruptions around the world of as much as 3.75 million barrels per day (bpd) have wiped out a glut that pulled down oil prices by as much as 70 percent between 2014 and early 2016.

The disruptions triggered a U-turn in the outlook of Goldman Sachs, which had long warned of global storage hitting capacity and of yet another oil price crash to 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,” it said.

However, Goldman cautioned that the market would flip back into a surplus in the first half of 2017 as it said prices around $50 per barrel in the second half of 2016 would see exploration and production activity picking up.

In Nigeria, output has fallen to its lowest in decades at around 1.65 million bpd following several acts of sabotage.

In the Americas, US officials warned they were growing increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices.

Venezuela’s oil production has already fallen by at least 188,000 bpd this year.

In the United States, crude production C-OUT-T-EIA has fallen to 8.8 million bpd, 8.4 percent below 2015 peaks as the sector suffers a wave of bankruptcies.

And in China, output fell 5.6 percent to 4.04 million bpd in April, year-on-year.