Oil jumps as Goldman Sachs boosts price forecast by a third

LONDON: Oil jumped after Goldman Sachs Group Inc. boosted a price forecast by a third and said global crude markets have probably rebalanced.

West Texas Intermediate futures added 0.6% in New York. Strong fuel demand and output cuts by OPEC have helped clear a glut six months earlier than anticipated, Goldman analysts Damien Courvalin and Jeff Currie said in a report, raising their six-month price expectation to us$82.50 a barrel from us$62.

“The rebalancing of the oil market has likely been achieved,” the analysts said.

WTI for March rose 40 cents to US$65.13 a barrel on the New York Mercantile Exchange at 9:18 a.m. London time, after adding 23 cents on Wednesday. Total volume traded was about 29% above the 100-day average. Front-month futures are still down 1.5% this week. Wednesday’s relatively small gain was spurred by the first draw in U.S. gasoline stockpiles since early November.

Brent for April settlement was at US$69.30 a barrel on the London-based ICE Futures Europe exchange, up 41 cents. The March contract expired Wednesday after rising 3 cents to $69.05. The global benchmark crude traded at a premium of US$4.36 to April WTI.

Last week, U.S. oil output surged above 10 million barrels a day for the first time in more than four decades, while nationwide stockpiles ended 10 consecutive declines, government data showed Wednesday.

The run of inventory declines -- as well as OPEC cuts and a weaker dollar -- helped send prices to a fifth month of gains in January, the longest such streak since 2011. 

Still, the gain was seen spurring American drillers to pump more, prompting fears that stockpiles would once again start to build. Additionally, inventory increases were on the horizon due to seasonal refinery maintenance.

Oil-market news:
• U.S. crude stockpiles climbed 6.78 million barrels to 418.4 million barrels last week, according to government data. Contributing to the expansion was a 41,000-barrel increase in daily production as well as the biggest tranche of imported oil since August.

• U.S. gasoline inventories dropped by 1.98 million barrels, according to the data, helping ease concern over lackluster demand. 

• Royal Dutch Shell Plc said improved exploration and production lifted its quarterly profit to a three-year high, while refining and trading fell short of expectations as margins shrank.

• BHP Billiton Ltd., seeking to accelerate the sale of its U.S. shale unit, is prepared to offer the assets in as many as seven packages, including three in the prized Permian Basin, according to people with knowledge of the producer’s plans. - Bloomberg