Oil prices soar to six-month highs in wake of global supply disruptions

Francesca Washtell
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High Oil Prices Continue To Drive Gas Prices Steadily Upwards
Oil prices soared in morning trading (Source: Getty)

Oil prices rebounded to a six-month high this morning, lifted by disruptions to oil output in Nigeria and the usually bearish Goldman Sachs taking a bullish turn on the market.

The price of Brent crude jumped 2.2 per cent during morning trading to a high of $48.90, the highest level since October 2015.

Meanwhile, the price of the US benchmark West Texas Intermediate (WTI) had risen by 2.06 per cent by late-morning trading to $47.16.

US oil prices soared to a 2016 high last week after a shock drop in US oil shocks and the effects of wildfires in Canada's oil-producing regions.

Political tensions in Venezuela, which instituted a state of emergency on Friday, also helped to boost both prices.

Read more: Saudi Aramco says it's likely to ramp up production

Supply disruptions of around 3.75m barrels per day have brought an end to the glut that wiped out prices by around 70 per cent in 2014, leading to a 13-year low in January of this year.

"The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman Sachs said in response to the disruptions.

"The market likely shifted into deficit in May ... driven by both sustained strong demand as well as sharply declining production," the investment banking firm said.

Last week, Goldman said the stable declines in non-Opec production would be key to whether oil markets will ultimately recover sustainably. The bank's base scenario predicts a sustained deficit in the third quarter of the year, until which crude prices are expected to hover around current levels.

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