At their meeting in Vienna on Wednesday, the member nations of OPEC agreed to cut their oil production by 4.5% for a period to run 6 months, effective January 1st. The amount of oil output each member is expected to forgo is generally based on their October production, although for some countries, such as Iran, the baseline for the output cut has been adjusted for special factors. Libya and Nigeria, whose recent production has been disrupted by civil conflict, will be exempt from the cuts.
The reality of the crude oil glut finally caught up with the oil price rally that had been driven by rumors of an OPEC / Russian pact last week, as oil prices fell 5% in their first weekly loss since mid-February. Almost the entirety of that drop occurred on Wednesday, after the EIA release of the weekly oil data, which showed a near record addition to our already record crude stockpiles.
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