The final communique made no mention of whether the kingdom, or any other member, could compensate for losses elsewhere. Yet it said the group as a whole should strive for “overall conformity” of 100 percent, which in practice will only be achievable if those nations with spare production capacity step in to fill the gap left by others.
"The lack of specificity is bullish for prices,” said Joe McMonigle, senior energy analyst at Hedgeye Risk Management LLC. “It’s a mystery oil production increase because we don’t really know the final numbers."
OPEC is going to raise production by maybe 1 million barrels a day which is less than it could have. That probably represents the difficulty that exists in getting Saudi Arabia and Iran to agree on anything and suggests the market will be tighter than might otherwise have been the case.
West Texas Intermediate bounced emphatically from above the trend mean today and a sustained move below it would be required to question medium-term scope for continued upside.
Brent Crude has steadied from the $72.50 area and upside follow through next week would break the month-long progression of lower rally highs and signal a return to demand dominance beyond short-term steadying.