Crude Oil Reacting To Report OPEC Has Not Reached New Deal On Oil Supply

The United Staes Oil Fund LP (ETF) USO opened Thursday’s session down more than 2.1 percent following reports that OPEC has yet to agree to a new production ceiling.

Despite market jitters, Saudi Arabia’s energy minister Khalid al-Falih assured Reuters that investors don’t have to worry about a major market disruption.

“We will not shock the market,” he said after indicating his pleasure with oil’s price recovery to near $50 per barrel.

Related Link: OPEC Officials Are Meeting In Austria; Credit Suisse Expects No Action

The downturn in global oil prices was part of a strategy on the part of OPEC to re-gain market share that had been lost to non-OPEC producers in recent years. Now that many of these producers have been driven out of the market for the time being, Saudi Arabia has been pushing for a new output ceiling. Kuwait and Qatar seem to agree with the idea, but Iran, Venezuela and Algeria are reportedly opposed to an output ceiling without country-specific quotas.

While the market never likes uncertainty and conflict, Credit Suisse analyst Jan Stuart expects the OPEC meeting to ultimately be a non-factor for investors. Earlier this week, Stuart argued that OPEC will almost certainly choose to maintain the status quo in an improving oil market, and that would bet the best possible outcome for oil investors.

Disclosure: the author holds no position in the stocks mentioned.