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CORRECTED-UPDATE 3-Oil prices rise on Nigerian outages, Goldman forecast

Published 16/05/2016, 09:11 pm
© Reuters.  CORRECTED-UPDATE 3-Oil prices rise on Nigerian outages, Goldman forecast
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(Corrects to show prices highest since November, not October 2015, paragraph 1)

* Major oil exporters Nigeria, Venezuela in crisis

* U.S., China output also down sharply

* Goldman Sachs (NYSE:GS) says market flipping into deficit

* Inventories still very high - Morgan Stanley (NYSE:MS)

By Henning Gloystein and Dmitry Zhdannikov

SINGAPORE/LONDON, May 16 (Reuters) - 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 LCOc1 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.

U.S. crude futures CLc1 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. 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. 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. the Americas, U.S. officials warned they were growing increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices. 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. in China, output fell 5.6 percent to 4.04 million bpd in April, year-on-year. this, supply rose from the Organization of the Petroleum Exporting Countries (OPEC) as its producers are engaged in a race for market share. pumped 32.44 million bpd in April, up 188,000 bpd from March, the highest since at least 2008. preventing steeper price jumps was a recovery in output in Canada following closures due to a wildfire, as well as bloated global crude storages. inventory buffer may be preventing full price recovery and ... the market is rightly nervous about the sustainability of outages," said Morgan Stanley.

Barclays (LON:BARC) said that "while the supply-side disruptions are supporting oil market balances, refinery margins are starting to weaken, especially in Asia," adding that weaker demand from those refiners could produce "downside risk to prices in Q3 16."

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