After the Organization of Petroleum Exporting Countries (OPEC) penciled in an oil production cut of 1.2 million barrels per day (bpd) to 32.5 million bpd on 30 November, the crude futures market rallied. Given that it was OPEC’s first move to cut production in eight years, the market response was pretty predictable.
By some measures, the Brent front month contract’s appreciation was nothing short of spectacular. Having languished just above $45 per barrel before OPEC’s move, Brent jumped 17.8% week-over-week, to the lower $53 range. Then in a first pact of its kind since 2001, selected non-OPEC producers, especially Russia, heeded OPEC’s call to lower production by a combined 558,000 bpd.
