Oil continued its rally on Monday, reaching a six-month high after supply disruptions in Nigeria moved the market into deficit.
The rebound from a 12-year low recorded in February is gradually bringing back optimism among energy and economic investors, but most importantly, it gives a clear direction of the market if producers were to cap production.
The US West Texas Intermediate oil traded at $47.81 a barrel on Monday before declining to $47.45, while Brent crude oil rose 2.8 percent to $49.19 a barrel.
Stocks of oil dependent economies rallied with Canadian stocks reaching a two-week high as S&P/TSX Composite Index rose 1.1 percent to 13,898 at 11:05 Toronto time.
Nigerian Stock Exchange All Share Index gained 1.45 percent to 26,824.35 at 9:20 a.m. in Nigeria.
Goldman Sachs Group Inc. reportedly increased its WTI price forecasts for this year from a $38.40 a barrel to $44.60, the institution said there will be more inventories reduction in the first quarter of 2017, with low-cost production continuing to grow.
Barclay’s analysts, Miswin Mahesy and Kevin Norrish also said in a report “that the oil market looks set for a rebalance faster than previously thought, making the risk of a sharp drop unlikely”.
While Goldman Sachs and Barclays analysts believe rebalancing of the market has started, it is too early to tell.
