As oil prices climbed today, analysts at Goldman Sachs are saying that production outages have turned the oversupply of crude into a shortage.
Oil production has outstripped demand for almost two years, but low prices have crude producers in Canada and Nigeria cutting their output, as demand from rapidly industrializing giants like China and India is boosting prices for black gold.
Goldman has been one of the most bearish onlookers of the oil slump this year, at one point predicting a price drop to $20/barrel—but in April, it forecast oil will reach the $40 range in the second half of the year, and now the bank expects oil prices to hit $50/barrel this year, the Wall Street Journal reports.
Oil prices are already up over 20% this year, fueling market optimism. “There is little doubt that momentum in these markets is firmly on the side of higher prices,” said fuel distributor TAC Energy. [WSJ]
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