Oil prices increased more than 1 percent on Monday after Goldman Sachs stated that the market has ended for nearly two years of oversupply subsequent to a global oil disruptions and a market deficit.
Meanwhile, the international Brent crude futures currently change hands at $48.50 a barrel, which was up by 67 cents, or 1.4 percent after the market close.
U.S. West Texas Intermediate crude futures rallied by about 68 cents, or 1.5 percent and traded at at $46.89 per barrel.
A U-turn in Goldman Sachs’ oil outlook was triggered, led by supply disruptions from Nigeria, Venezuela, the United States and China, which was consistently warned of spilling over storage and in an approaching crash in prices.
"The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman said.
"Likely shifted into deficit in May ... driven by both sustained strong demand as well as sharply declining production," he added.
A major suspension of oil exports was ordered by Nigerian’s Exxon Mobil from their biggest crude stream, Qua Iboe, along with other producers that also struggled disruptions following acts of sabotage, trimming the output of the country down to its lowest level in decades by about 1.65 million barrels per day.
Subsequently, America’s major oil exporter Venezuela is likely on the edge of meltdown, citing concerns of default by PDVSA – national oil company, which should generate about $5 billion in bond payments this 2016.
The oil production of Venezuela has already declined by nearly 188,000 bpd since this year started as PDVSA remained wary on how to make the investment needed in order to keep their output stable.
In addition, the oil production of the United States has decreased by about 8.8 million bpd, down by 8.4 below 2015 peaks, fueled by slump in the sectors that struggled from bankruptcies.
China’s output has also fallen by 5.6 percent down to 4.04 million bpd in April, compared with the same period in the prior year.
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