Oil prices jumped over 1 per cent on Monday after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit following global oil disruptions.

Brent crude futures were trading at $48.47 per barrel at 7.03am, up 64 cents, or 1.3 per cent, from their last settlement.

US crude futures were up 62 cents, or 1.3 per cent, at $46.83 a barrel.

Supply disruptions around the world of as much as 3.75 million barrels per day (bpd) have wiped out a glut that pulled down oil prices by as much as over 70 per cent between 2014 and early 2016.

The disruptions have now triggered a U-turn in the outlook of Goldman Sachs, which long warned of overflowing storage and another looming price crash.

“The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected,” Goldman said.

“The market likely shifted into deficit in May...driven by both sustained strong demand as well as sharply declining production,” it said, flipping the market from a 2 million bpd in 2015 supply overhang to a deficit of over 400 million bpd by the fourth quarter this year.

However, Goldman cautioned that the market would flip back into a surplus of 258-403 million bpd in the first half of 2017.

In Nigeria, output has fallen to its lowest in decades at around 1.65 million bpd following several acts of sabotage.

In the Americas, Venezuela seemed on the brink of meltdown, triggering fears of default by its national oil company PDVSA, which has to make almost $5 billion in bond payments this year.

Venezuela’s oil production has already fallen by at least 188,000 bpd this year.

In the United States, crude production has fallen to 8.8 million bpd, 8.4 per cent below 2015 peaks as the sector suffers a wave of bankruptcies.

And in China, output fell 5.6 per cent to 4.04 million bpd in April, year-on-year.

Countering this, supply rose from the Organisation of the Petroleum Exporting Countries (OPEC) as its producers are engaged in a race for market share.

OPEC pumped 32.44 million bpd in April, up 188,000 bpd from March, the highest since at least 2008.

Also preventing steeper price jumps was a recovery in output in Canada following closures due to a wildfire, as well as bloated global crude storages.

“The inventory buffer may be preventing full price recovery and ... the market is rightly nervous about the sustainability of outages,” said Morgan Stanley.

Barclays said that "while the supply-side disruptions are supporting oil market balances, refinery margins are starting to weaken, especially in Asia," adding that weaker demand from those refiners could produce "downside risk to prices in Q3 16."

Reuters