Oil prices have jumped over 3 percent to their highest since October 2015. As Sonia Legg reports, it follows growing Nigerian oil output disruptions and long-time bear Goldman Sachs saying the market had ended almost two years of oversupply.
Two years of too much oil has played havoc with the global economy. But Goldman Sachs thinks the market has slipped back into deficit. That sent oil prices up to their highest since October 2015, even though a surplus may return in 2017. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "We don't see a huge amount of evidence that supply and demand are really showing any real signs of getting back into equilibrium and indeed if one reads further down the Goldman Sachs report it would appear as if their forecast for the oil price has been somewhat downgraded. They and a number of other forecasters believe that WTI will struggle to get above $50." Oil prices have fallen by as much as 70 percent over the past two years. And not long ago Goldman was warning they could hit $20 per barrel. Its U-turn follows supply disruptions to as much as 3.75 million barrels per day. Nigeria's output has fallen to its lowest in a decade following acts of sabotage. Venezuela has been hit by an economic meltdown. And a wave of bankruptcies in the U.S. has led to a fall from last year's peak of almost 9 percent. Then there's China - output last month was down almost 6 percent on the previous April. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "When you get negative headlines such as this, it does tend to have a positive knock on effect on the oil prices algorithms, but I'm afraid to say that on a underlying basis, it's marginal." OPEC is certainly pumping at levels not seen since 2008. And then there's Iran - trying to win back its share of the market after years of sanctions.