Oil hits six-month high as Goldman Sachs claims oversupply problems over – business live
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Shares in BP and Royal Dutch Shel l have risen by around 0.8% this morning, following the jump in the oil price.
block-time updated-timeUpdated at 9.07am BST
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enltrThe price of oil is on the march again as Brent Crude Oil passes US $48 this morning...
—
Shaun Richards (@notayesmansecon)
May 16, 2016
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Goldman is also predicting that the oil market will remain in deficit until the end of the year.
However, it would then return to oversupply in 2017:
Goldman Sachs’ oil forecasts Photograph: Bloomberg
If they’re right, that suggests prices may not rise too dramatically from current levels.
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Oil at six-month high
Brent crude oil is bobbing around a six-month high, as traders digest Goldman’s claim that the market is now in deficit:
Brent crude over the last 12 months Photograph:
Thomson Reuters
block-time updated-timeUpdated at 8.40am BST
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Oil jumps as Goldman says market in deficit
The oil price has jumped this morning after Goldman Sachs declared that the long run of oversupply was coming to an end.
In a new report, the Wall Street firm argues that the oil market has actually flipped into deficit, due to various supply disruptions.
That would end a two-year run of oversupply that pushed crude prices down to seven year lows at the start of 2016.
Goldman writes:
“The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected....
The market likely shifted into deficit in May... driven by both sustained strong demand as well as sharply declining production.”
Goldman has also hikes its US crude price forecast to $50 a barrel for the second half of 2016, from a $45 estimate in March.
That has send US crude jumping by 1.5% in early trading, to $46.92 per barrel.
Brent crude (sourced from the North Sea) is also up 1.5% to $48.55 per barrel.
Aftermath of wildfires in
Fort McMurray, Alberta. Photograph: GOVERNMENT OF ALBERTA/CHRIS SCHWARZ/EPA
The wildfires that struck Canada’s Fort McMurray were the most newsworthy reason that production levels have fallen recently.
Other factors include disruption in Nigeria, where pipelines have been sabotaged, and the swathe of US shale producers who have halted drilling since prices fell.
Ands that means the market will stay in deficit through the second half of this year, according to Goldman anyway.
block-time updated-timeUpdated at 8.22am BST
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The agenda: Markets dip after China data miss
Good morning, and welcome to our rolling coverage of the financial markets, the global economy, the eurozone and business.
There’s a definite Monday morning feeling in the City today.
Europe’s main stock markets have opened in the red, following some disappointing Chinese economic data over the weekend.
China’s factory output missed forecasts in April, growing by 6% versus expectations of 6.5%. Investment and retail sales also grew more slowly than expected last month, which is giving investors another reason to worry about its economy.
Commerzbank economist Zhou Hao summed up the mood:
“We’re seeing that growth engines are losing momentum, and the growth outlook has turned soft as well.
It’s clear the government wants to manage down or re-anchor market expectation.”
And that’s pushed markets down in early trading:
- Britain’s FTSE : 6108, down 29 points
- French CAC : 4289, down 30 points
(Germany isclosed for Whit Monday or Pentecost Monday ).
We’ll be tracking all the main events through the day. That will include any developments around Greece – with just seven days to go until finance ministers to (hopefully) conclude the Greek bailout review.
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