We see the recovery oil price continuing into 2017 with an average price of US$54 Brent off the back of a strong stock drawdown forecast for H2 2017. Supply is expected to start rising from the US L48 while Russian production strength continues. Middle East producers will remain in deficit at our forecast oil price with Iraq struggling the most whereas the Iranian economy is the least sensitive to the oil price. In the global upstream sector, costs are expected to fall further in 2017, according to the operators who responded to our annual sector survey. However, suppliers expect significantly smaller cost reductions and none at all in some sub-sectors. In the US Lower 48, we highlight the overall improvement in well productivity in the leading three sub-plays of the Permian. Our US L48 cost of supply curve now shows that, at current oil prices, we expect 2016 declines to be matched by new wells, requiring some 400-500 rigs. We review these topics and more in our Energy Snapshot.