Crude oil futures held near six-month highs in early Asian trading as the market focused on supply disruptions that prompted long-time bear Goldman Sachs to issue a bullish assessment on near-term prices.
Crude futures have rallied for most of the past two weeks from a combination of Nigerian, Venezuelan and other outages, declining US production and virtually frozen inflows of Canadian crude after wildfires in Alberta's oil sands region.
US crude’s West Texas Intermediate (WTI) futures were up 8 cents at $47.80 a barrel at 0047 GMT. They rose $1.51, or 3.3 per cent, to end at $47.72 after touching a six-month high on Monday.
Brent crude futures were down 5 cents at $48.92 a barrel after rising slightly following the opening of trade. The contract settled up $1.14, or 2.4 percent, at $48.97 per barrel on Monday, having risen above $49 earlier in the session.
“The increasing intensity in supply-side disruptions in the oil market should see prices well supported in the short term," ANZ said in a research note.
The supply 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.
A further bullish note was sounded by the US Energy Information Administration (EIA) on Monday, when it said shale oil output is expected to drop in June for the eighth consecutive month.
Shale output is expected to fall by nearly 113,000 bpd to 4.85 million bpd, as the nearly two-year slump in prices continues to undermine profitability at drillers, according to the EIA’s drilling productivity report released on Monday.