ML-Implode News - Goldman Surprised by Sudden Oil-Market Turn as Glut Vanishes

The unexpected outages caused by everything from wildfires in Canada to pipeline attacks in Nigeria will keep production below demand through the second half of this year, according to Goldman. Still, the return of some output and higher-than-expected volumes from the U.S., the North Sea, Iraq and Iran mean the shortfall will be 400,000 barrels a day rather than the 900,000 previously predicted, it said. A return to surplus production is seen in early 2017.
"The physical rebalancing of the oil market has finally started," Goldman said. The bank raised its U.S. crude price forecast for the second half of 2016 to $50 a barrel from $45 estimated in March. It cut its forecast for the first quarter of 2017 to $45 from $55, but sees oil at $60 by the end of that year. The bank expects global demand to grow by 1.4 million barrels a day in 2016, versus 1.2 million predicted previously.
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Goldman's expectation for a return to a production surplus in 2017 reflects the view that low-cost suppliers such as Saudi Arabia, Kuwait, the United Arab Emirates and Russia will continue to drive output growth, the bank said.

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Goldman Surprised by Sudden Oil-Market Turn as Glut Vanishes