Goldman Sachs: OPEC, non-OPEC announced oil cuts smaller than expected

Analysts at Goldman Sachs present their afterthoughts after an output cut deal was finally reached between the OPEC and non-OPEC producers over the weekend.

Key Headlines via Bloomberg:

Announced cuts are smaller than expected

Implementation remains uncertain

Nevertheless, the agreement removes the uncertainty surrounding participation of non-OPEC nations to OPEC reduction

Saudi Arabia will help achieve a normalization of inventories ... even if it requires a larger unilateral cut

The cuts support the bank's H1 (2017) WTI price forecast of $55/barrel

GS bases this forecast on effective 1m b/d cuts

 Greater compliance to the 1.6 target is therefore an upside risk to price forecast

“Better compliance than bank expects would initially lead to higher prices -- with full compliance adding $6/bbl to its price forecast  .... but then there would be a bigger producer response”