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Now That OPEC Has Agreed to Cut, Debate Shifts to Whether It Will Be Enough

OPEC's decision to implement its first production cut in eight years may prove to be more of a symbolic gesture than an effective long-term solution to the global supply-demand imbalance that has plagued the oil industry for the past two years, but some still expect it to dominate the global market for the foreseeable future.

"The immediate impact is to accelerate the rebalancing of an already tightening market with inventories likely to return to more normal historical levels, potentially within six months based on our calculations," Barclays United Kingdom-based analyst Lydia Rainforth wrote in a recent research note. "Critically we see market participants pricing this in ahead of the physical inventories actually normalizing and as a result we could see a further meaningful upwards move in the oil price as evidence that the market is really tightening emerges."

A return to balance in six months is a bold statement from Barclays' analysts across the pond when compared to some U.S.-based analysts' expectations.

Stephens Inc.'s Matthew Marietta tells TheStreet that by the firm's models the world's oil markets would need to run at a 1 million barrel per day supply deficit for 1 1/2 years to normalize inventories tallied by the Organization for Economic Cooperation and Development's International Energy Agency.

"All OPEC's cut will accomplish is to run a fairly neutral supply-demand complex for the first six months of next...


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