December 3, 2015 – Long Island, NY – Oil prices rallied today as a result of a weaker dollar and news reports indicating that Saudi Arabia, the oil cartel’s most influential member, was going to propose that OPEC cuts production by 1 million barrels a day next year, but only if fellow OPEC member Iran, as well as non-OPEC producers, cut their output. The report comes just hours away from tomorrow’s OPEC meeting and most analysts don’t believe that there will be an OPEC output cut at Friday’s meeting.

Iran said that it actually intends to increase oil input. If Iran cuts production, it would be “essentially forgoing the chief benefit of Iran’s nuclear agreement with world powers,” said Tim Evans, energy futures specialist at Citi Futures. “Even Saudi Arabian sources said the report of such an offer was ‘baseless’,” he said, and “so the market was back to square one, with OPEC unlikely to cut output at Friday’s summit.”

It’s been a little over a year after OPEC adopted a policy to keep output high in the hopes of squeezing out other oil producers and gain market share.

James Williams, energy economist at WTRG Economics stated that “if the Saudis say they will do something that depends on Russian cooperation, they have not said anything. I see it as a strong indicator of no policy change by the GCC [Gulf Cooperation Council] members.”

Richard Hastings, macro strategist at Seaport Global Securities said, “The trading market is diving into some price arbitrage…after a tough, almost oversold week.” WTI oil prices fell 4.6% on Wednesday to settle below $40 a barrel for the first time since August after the U.S. reported a 10th straight weekly increase in crude stockpiles, while Brent prices finished near a 7-year low. Today’s news helped crude recoup nearly 3% of the decline in prices we saw earlier this week.