Oil futures rose for a second straight session on Tuesday, with US crude hitting a six-month high, as the market focused on supply disruptions that prompted long-time bear Goldman Sachs to issue a bullish assessment on near-term prices.
Oil prices have rallied for most of the past two weeks due to a combination of Nigerian, Venezuelan and other outages, declining US output and virtually frozen inflows of Canadian crude after fires in Alberta's oil sands region.
US West Texas Intermediate futures were up 50 cents at $48.22 a barrel early on Tuesday. They hit $48.28 earlier in the session, the highest since November.
Brent crude futures were up 28 cents at $49.25 a barrel, near six-month highs of $49.47 reached on Monday.
"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 disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs. The US bank, which had long warned of global storage hitting capacity and of another oil price crash to as low as $20, now sees US crude trading as high as $50 in the second half of 2016.
A further bullish note was sounded by the US Energy Information Administration (EIA) when it said shale oil output is expected to drop in June for an eighth consecutive month.
Shale output is expected to fall by nearly 113,000 barrels per dayto 4.85 million bpd, as the nearly two-year slump in prices continues to undermine profitability at drillers, the EIA report released on Monday shows.
Oil prices were also drawing support from fires burning around the Canadian oil sands hub of Fort McMurray.
The fires were growing and moving rapidly north late on Monday, forcing firefighters to shift their focus to protecting major oil sand facilities north of the city, officials said.
A dozen work camps south of the major projects faced mandatory evacuation notices.