OPEC deal could boost oil prices but uncertainty remains: Goldman Sachs

Goldman Sachs has said that a deal agreed by the Organization of Petroleum Exporting Countries to cut oil production is likely to prop up prices for the short term at least, but has remained firm on its forecasts.

In a note sent to its investors, Goldman said that it was maintaining its forecasts of $43 a barrel for the end of 2016 and $53 a barrel for the year after.

As most other banks, the group is wary that the deal may not be implemented as strictly as possible.

OPEC states agreed on Wednesday to reduce production to between 32.5m and 33m barrels per day, in an effort to drive up low prices.

"If this proposed cut is strictly enforced and supports prices, we would expect it to prove self-defeating medium term with a large drilling response around the world," Goldman's analysts said.

"Compliance to quotas is historically poor, especially when oil demand is not weak."

Oil futures stormed higher on Wednesday as a result of the unexpected deal, with Brent crude 5.18% higher to $48.48 per barrel on the ICE.