OPEC delivers a Christmas present for the market, but planned projects suggest the deal will need to be extended Brent rallied strongly to $55.68/bbl (+12%/$6.71/bbl m-o-m) following OPEC and non-OPEC agreements in November and December. Our average Brent price reference case forecast is a range of $55-66/bbl for 2017. India has outpaced China’s oil demand growth, but both countries continue to drive firm global demand growth for 2016/17. The Permian basin will be the most responsive of the LTO basins to any oil price recovery, but will be unable to offset declines from Bakken and Eagle Ford. We continue to forecast a decline for annual average US LTO production in 2017. Any recovery in US onshore production from 2018 depends on capital availability. Russia’s planned projects will add 1.4 million b/d peak capacity and likely continue to grow production until 2020; few new projects planned to hold production steady thereafter. Further capex cuts elsewhere are expected in 2017, as a result offshore industry continues to suffer. Lack of investment outside OPEC still poses a risk to filling the long-term supply gap. Albeit a production cut agreement is in place, we still expect to see a net growth of 340,000 b/d from OPEC in 2017 and accelerated growth in 2018, suggesting cuts may need to be extended. We see non-OPEC production flat in 2017. Continuing strong demand growth will rebalance the market by mid-2017, in our view.