OPEC Announcement

The market had low expectations heading into this week's OPEC meeting. The story broke Wednesday afternoon. From Bloomberg:

OPEC agreed to cut production for the first time in eight years, sending oil prices more than 6 percent higher, as Saudi Arabia and Iran wrong-footed traders who expected a continuation of the pump-at-will policy the group adopted in 2014, according to a delegate briefed on the matter.

In two days of round-the-clock talks in Algiers, the group that supplies about 40 percent of the world's oil said that it will drop production to 32.5 million barrels a day, nearly 750,000 barrels a day lower from what it pumped in August, the delegate said, asking not to be named because the decision isn't yet public.

How Did The Markets React?

The initial reaction in energy stocks (XLE) was positive. However, as shown in the chart below, XLE still has some hurdles to clear.

Late in Wednesday's session, the crude oil ETF (USO) was up over 5%. However, just like energy stocks, some hurdles remain.