Analysts’ take on the Algiers OPEC agreement

Opec’s surprise agreement to cut oil production — for the first time in eight years — buoyed crude oil prices, amid signs the coordinated action would help reduce supply in the market.

This is a snapshot of analysts’ reaction

MORGAN STANLEY
This is not the only Opec agreement to limit production in this downturn, and thus scepticism on finalisation is warranted... A production freeze agreement early in 2016 failed to materialise at the April Doha meet when more specific commitments were required. Similarly, without country level allocations, this latest agreement could come apart as the details are negotiated...

CITIGROUP
Look deeper and the ‘deal’ becomes less and less meaningful, and more and more rhetorical. Saudi might be reducing crude output by as much as 0.5 million barrels a day going into fourth quarter of 2016 in any case, as internal crude oil demand for power generation goes down seasonally after the summer; much of this cut is what would have happened regardless of any deal.

GOLDMAN SACHS
We reiterate our year-end $43 a barrel and 2017 $53 a barrel forecasts given:
(1) uncertainty on this proposal until it is ratified especially as it relates to Saudi cuts and Iran caps,
(2) likely quota beats if ratified,
(3) our conservative supply forecasts outside of Opec for next year.