Oil prices hit six-month highs on Monday on worries about supply outages in Nigeria and Venezuela and as long-time bear Goldman Sachs sounded more positive on the market, although a stockpile build at the U.S. storage hub for crude futures pared gains.
Word that Libya was resuming crude shipments from the port of Hariga after an agreement reached at talks in Vienna between rival oil officials also limited the market’s advance. Exports from the port have been blocked since early this month.
Brent crude futures were up $1.22, or 2.5 percent, at $49.05 per barrel by 12:23 p.m. EDT (1623 GMT). It was just 53 cents short of reaching $50 a barrel at the session high.
U.S. crude’s West Texas Intermediate (WTI) futures rose by $1.44, or 3 percent, to $47.65.
Crude futures have rallied for most of the past two weeks from a combination of non-OPEC supply outages, declining U.S. production and virtually frozen inflows of Canadian crude after wildfires in Alberta’s oil sands region.
Nigeria’s oil output has fallen to its lowest in decades after several acts of sabotage, industry officials and security experts said.
In the Americas, U.S. officials warned they were increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices, where crude production has also been falling due to power shortages.
The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of 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,” the investment bank said.
Crude futures, however, pared gains after Genscape’s report of a stockpile build of 694,176 barrels at the Cushing, Oklahoma delivery point for WTI futures, cited by traders.