“The physical rebalancing of the oil market has finally started,” Goldman Sachs analysts wrote in a report released Sunday, as the bank ramped up its U.S. crude price forecast to $50 a barrel for the second half of 2016 from its previous projection of $45.

"We believe the market has likely shifted into deficit in May," the analysts wrote, adding that the deficit was occurring a quarter earlier than previously expected.

This faster-than-anticipated rebalancing can be attributed to a sustained demand for oil, and a drop in output caused by unexpected disruptions in Canada, Nigeria and Colombia, which offset a sharp rise in oil production in Iraq and Iran.

However, the bank warned, the market is likely to return to a surplus in the first half of 2017, when Saudi Arabia, the United Arab Emirates, Iran and Iraq lead growth in low-cost output. This, the bank’s analysts added, highlighted a “structural imbalance” in the capital markets that is yet to be rectified.

Goldman also lowered its crude price forecast for the first quarter of 2017 to $45 a barrel from its previous projection of $55 a barrel.

“The industry still has further to adjust and our updated forecast maintains the same 2016-2017 price level that we previously believed was required to finally correct both the barrel and capital imbalances, and eventually take prices to $60 a barrel,” the analysts wrote.

The marked shift in Goldman’s oil outlook comes just days after the International Energy Agency said that strong demand growth, coupled with falling production in the U.S., Canada, Nigeria and Ghana would result in a “dramatic reduction” in oil stocks in the second half of the year. In its monthly oil market report released Friday, the IEA forecast that the gap between supply and demand would narrow to 200,000 barrels a day in the second half of 2016 from a staggering 1.3 million barrels a day in the first six months of the year.

At 2:52 a.m. EDT, a barrel of West Texas Intermediate was trading up 1.3 percent at $46.81 while Brent Crude — the international oil benchmark — was up 1.38 percent at $48.49 a barrel in London.