Barclays on the OPEC deal
Analysts at Barclays see upside for oil prices after this week's OPEC decision to cut production 1.2 million barrels per day from October levels.
"The changes to supply expectations make a material difference to our balances, taking out 0.5 mb/d of supply and bringing the supply/demand balance to almost zero in 1H18 compared with our early November estimates," they write today.
A risk would be more US production but they have talked to US producers and don't see them ramping up spending on capex, with an emphasis on free cashflow generation right now.
"We maintain our $72/b Brent price target next year and continue to believe that prices will increase from current levels as long as macro conditions are stable and as certain OPEC producers conform with their pledges," they write, with gains coming in the next 2-3 months.
Brent is down 92-cents to $60.75 today (shown above).
