A pumpjack brings oil to the surface in the Monterey Shale, California, U.S. April 29, 2013. Photo: Reuters, Lucy Nicholson

The extension to OPEC’s oil production cuts announced on Thursday disappointed markets expecting longer cuts and led to more questions about the outlook for OPEC members.

Goldman Sachs maintains an optimistic view that the 9-month extension of cuts will achieve a normalization in OECD inventories by early next year:

“Our Commodities Research colleagues latest supply-demand projections leave them expecting that a nine-month extension will achieve a normalization in OECD inventories by early 2018, even with gradually declining compliance.

“The main challenge in their view will be the transition from cuts to market share and revenue growth. Ultimately, backwardation will be required to make these cuts a success and prevent an unbridled ramp up in shale production growth. 2H17 Brent spot price forecast remains above the forwards at $57/bbl.”