NEW YORK/LONDON Oil prices hit six-month highs on Monday on worries about global supply outages 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.
Expectations of resumption in oil exports from a Libyan port, a ramp up in Nigerian crude production by Exxon Mobil Corp (XOM.N) and an improved oil-for-loans deal reached by Venezuela with China furthered the tempered the bullish theme in oil.
Brent crude futures LCOc1 were up $1.03, or 2.2 percent, at $48.86 per barrel by 1:55 p.m. EDT (1755 GMT). It came just 53 cents short of hitting $50 a barrel at the session high.
U.S. crude's West Texas Intermediate (WTI) futures CLc1 rose by $1.28, or 2.8 percent, to $47.49.
Crude futures have rallied for most of the past two weeks from a combination of Nigerian, Venezuelan and other outages, declining U.S. production and virtually frozen inflows of Canadian crude after wildfires in Alberta's oil sands region.
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," said Goldman, which added that supply likely shifted into a deficit in May.
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.
"Considering that Canadian production was down 1 million barrels per day (bpd) last week, it was a surprise at all that we saw a build in Cushing," said a trader.
Libya is likely to continue crude shipments from the port of Hariga, that had been blocked since early this month, after an agreement reached at talks in Vienna between rival oil officials in the country.
Exxon Mobil is expected to ramp up its production of Nigeria's Qua Iboe crude oil this week, trading sources said, after a force majeure on exports was declared last week due to a damaged pipeline.
Venezuela reached a deal with its main financier China to improve conditions in an oil-for-loans deal that gives the OPEC member's crisis-hit economy "oxygen" ahead of heavy debt payments, a top economic official said.
While Goldman sounded more positive on the market than before, it also cautioned that at around $50 a barrel, supply could flip back into a surplus in the first half of 2017 if exploration and production activity picked up.
(Additional reporting by Henning Gloystein in SINGAPORE; Editing by Marguerita Choy)
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Updated Date: May 16, 2016 23:45 PM