Goldman ups oil price forecast as global supply flips to deficit

London

THE global oil market has flipped to a deficit sooner than Goldman Sachs Group Inc had expected.

A decline in production driven by unexpected supply disruptions as well as sustained demand have led to a "sudden halt" to the market surplus, Goldman analysts including Damien Courvalin and Jeffrey Currie wrote in a report dated May 15. That has prompted the bank to raise its US crude price forecast to US$50 a barrel for the second half of 2016 from a US$45 estimate in March.

The unexpected outages caused by everything from wildfires in Canada and pipeline attacks in Nigeria will keep the market in deficit till the second half of this year, according to Goldman. Still, the return of some of the output and higher-than-expected US, North Sea, Iraq and Iran production means that the bank predicts that the shortfall will be at 400,000 barrels a day versus the 900,000 previously expected. A shift back to a surplus is seen in e…