So much for OPEC giving oil stocks a boost

This morning I wrote about how OPEC had formally agreed on a 4% production cut and how that could lead to some strong gains today for oil holders. Well... I was wrong.

The market just does not seem to want to believe that OPEC is actually going to be able / willing to follow through on these cuts. Today oil fell to it's lowest level in the last 9 months in a sign that analyst's just do not have faith in the oil cartel's ability to follow through on meaningful production cuts. Many think that since oil is still relatively high the world's largest oil producers will not see the incentive in cutting back their output.

Much of the pessimism ties back to OPEC's history of over producing above it's quotas during time when prices have been high, and even though oil has fallen dramatically since the middle of the summer, we are still looking at pretty pricey oil. No, it's not the $80 a barrel we saw a few months back, but at it's current $56.82 we are still seeing prices that are twice as high as we had 3 years back. Another reason why today's announcement actually backfired against the cartel was the impression that today' move is a signal that global demand has actually fallen enough that these cuts aren't really going to impact the overall price anyway. Many are seeing OPEC's actions as just a big signal that oil has turned bearish for a reason, and nothing is going to change that.

Across the board we saw losses for oil stocks today, but nothing too major:

• Sunoco, Inc. (NYSE:SUN): -0.9% to $65.65 down $0.58
  
• Valero Energy Corp. (NYSE:VLO): -1.6% to $52.09 down $0.85
  
• ExxonMobil Corporation (NYSE:XOM): -0.3% to $69.55 down $0.18
  
• Chevron Corporation (NYSE:CVX): -0.5% to $65.28 down $0.36
  
• BP p.l.s. ADR (NYSE:BP): -0.4% to $67.80 down $0.28
  
• Oil Service Holders Trust (OIH): -2.1% to $130.00 down $2.85