OPEC reached the first agreement in 8 years to cut oil production by 1.2 million barrels per day (bpd) to 32.5 million bpd for six months starting in January 2017. Goldman Sachs, in its report, said the implementation will be the key to such output cut. Looking at the last 17 production cuts (1982-2009), the broker observed that production cuts have typically come in at 60% of the announced cuts.
The broker forecasted the WTI to reach US$55 per barrel by 1H17, while expected Brent oil futures to reach US$56.5 per barrel. With the output cut, the broker expected the global oil market to see a shortage in supply in 1H17.
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