Oil prices rise as Goldman Sachs says market is now in deficit

London (May 16)  Oil prices climbed Monday as Goldman Sachs said that the market is now in shortfall, boosting a sector that has suffered from a severe glut for almost two years.

The global crude benchmark Brent LCON6, +2.13%  was up 1.6% at $48.59 for July cargoes while West Texas Intermediate CLM6, +2.16%  was up 1.5% to $46.91 for June deliveries.

Goldman Sachs said that the recent outages from large producers such as Canada and Nigeria had sent the oil market from nearing full storage levels to being in deficit.

Read: Goldman Sachs says oil surplus has come to a ‘sudden halt’

Goldman Sachs has been among the most bearish of banks on the price of oil. It still predicts tough times ahead for the sector, saying that low-cost oil producers could push the market back into surplus by early 2017.

The bank remains relatively negative on price, forecasting $45 oil by the first quarter of 2017 and $60 a barrel by the end of that year.

New production outages in Nigeria, caused by attacks on infrastructure, are likely to continue supporting the oil price in the short term. They come just as concerns over supply in Canada are starting to fade as its oilfields restart following shutdowns caused by wildfires.

Source: Reuters