Oil Jumps in Early Monday Trading as Goldman Says Market Now in Deficit, Another Tricky Week Ahead for Bunkers?

Goldman Sachs says the market "likely shifted into deficit in May."

Bunker buyers could be facing another tricky week in trying to decipher what direction prices will be headed.

Monday started with a bang, as long time "lower for longer" advocate Goldman Sachs joined the oil bulls, saying the market "likely shifted into deficit in May."

While noting supply disruptions for producers such as Nigeria, Goldman Sachs said "the oil market has gone from nearing storage saturation to being in deficit much earlier than we expected and we are pulling forward our price forecast, with 2Q/2H16 WTI now $45/bbl and $50/bbl."

Crude benchmarks responded by jumping around 1.5 percent in early trading.

Goldman's view echoes that of the International Energy Agency who last week said that despite rising output from the Organization of the Petroleum Exporting Countries (OPEC) global oil supply and demand will soon get "very close to balance."

The bulls have generally been pointing to a big drop in U.S. shale production, recent disruption in Canada from the Fort McMurray wildfires, and a ticking time bomb in Venezuela where they see financial woes caused by plummeting oil prices putting national oil company PDVSA at risk of defaulting on some $5 billion in bond payments this year.

Chinese output last month also fell 5.6 percent year-on-year to 4.04 million bpd, according to Reuters data.

But the bears are equally convinced prices are heading down, with OPEC's latest Monthly Oil Market Report (MOMR) Friday warning that the 2016 average daily surplus will be 950,000 barrels.

"Fundamentally, oversupply still persists; oil output remains high," it said.

Meanwhile, John Kilduff believes the state of the U.S. dollar, the economies of China, Japan, South Korea, and others, along with what he sees as an oversupply of 1.5 million barrels per day, as all reasons prices will be heading down - having predicted in March prices will plummet again to their February lows of $25/bbl.

With reasons for oil to make a sizeable jump in either direction, volatility then, is perhaps what bunker markets should expect this week.

Players should also be mindful that despite a soft end to the week for crude prices, bunkers finished Friday on a 2016 high.

Ship & Bunker's Global 20 Ports Average for IFO380 - which represents the average bunker prices across 20 key ports responsible for a vast majority of global volumes - last week fell $2.50 on Tuesday to $217 per metric tonne (pmt), only to then make three days of gains, jumping 5.5 percent to $229 pmt by Friday - the highest since November 13, 2105.