OPEC’s landmark oil-production deal may prove effective in running down global inventories, but analysts hold little hope for much of a rise in prices, a Reuters poll showed on Thursday.

If all members of the Organization of the Petroleum Exporting Countries honor the deal reached in Vienna on Nov. 30 to cut output, any ensuing price gain and drop in inventories could be quickly reversed by rising non-OPEC production.

“In the medium term, we can expect tighter market balances but for a substantial price recovery to take place, significant demand growth will be required to draw down high inventories of crude and products,” said Shakil Begg, head of Thomson Reuters Oil Research and Forecasts.

The 29 analysts and economists polled by Reuters forecast Brent crude futures will average $44.69 a barrel in 2016 and $57.01 in 2017, against $44.78 and $57.08 for the same periods in the previous survey about a month ago.

Brent has averaged about $44.50 per barrel so far this year.

“This is a short-duration cut, targeting excess inventories and not high oil prices, which would instead unleash a sharp production response both in the U.S. and in the rest of the world,” U.S. investment bank Goldman Sachs said in a note.

As part of its first oil output cuts since 2008, OPEC agreed to reduce production by about 1.2 million barrels per day beginning in January. It hopes non-OPEC countries will contribute a further 600,000 bpd of cuts.

The group will meet non-OPEC producers, led by Russia, in Vienna this weekend and seek their contribution to erode a global supply glut that could run into a third year in 2017. Russia has said it will reduce output by around 300,000 bpd.

A majority of analysts said the OPEC deal would have to extend beyond the six-month period currently agreed, for global oil rebalancing to occur in the second half of 2017.

“Curtailments from OPEC are required throughout 2017 to rebalance the market as U.S. shale supplies are expected to hit the market in 2017,” said Rahul Prithiani, director at CRISIL Research.

The poll forecast U.S. light crude will average $43.46 a barrel in 2016 and $55.23 in 2017. WTI has averaged about $43 so far in 2016.

Of the 28 respondents who participated in the current as well as the previous survey, 16 kept their forecasts unchanged.

Raymond James had the highest 2017 Brent forecast at $83 per barrel, while BNP Paribas had the lowest at $50.

Source: www.reuters.com