As my colleague Fawad Razaqzada noted earlier today, “it is not a question of whether [OPEC] will decide to cut supplies or not, but by how much.”

According to headlines at the start of the US session, OPEC has agreed to cut output, but it’s the “how much?” question that has pushed the cartel to delay its decision until (at least) tomorrow. With tough decisions looming on how production cuts should be distributed, including possible exemptions for Libya, Iran, and Venezuela, as well as the role of Russia (who is joining the meetings tomorrow), oil markets are set for a busy day tomorrow.

In tangentially related news, the EIA reported a surprising drawdown of US oil inventories. US commercial firms saw a decrease of -7.3M barrels in the last week, dwarfing the -2M expected reduction. The near-term decrease in supply has slowed the selloff in West Texas Intermediate crude oil, but the US benchmark is still trading down by more than 5% on the day.

Technically speaking, WTI has erased almost all its one-week 10% rally off the lows and is poised to retest the psychologically significant $50/barrel level again. Today’s drop was foreshadowed by back-to-back “bearish pin” or “inverted hammer” candles on Tuesday and Wednesday:

Source: TradingView, FOREX.com

It doesn’t take a rocket scientist to identify the strong bearish trend since the early October peak, and as long as that series of lower lows and lower highs is intact, the path of least resistance will remain to the downside. Looking ahead to tomorrow, the market appears to have priced in a production cut of around 1.0-1.3M barrels per day from OPEC, so any deviation from that range could lead to another round of selling (if the production cut is less than 1.0M bpd) or a recovery rally (if the cut is more than 1.3m bpd).

Update: As we’re going to press, headlines suggest that the Saudi Oil Minister is not confident that the cartel will be able to agree to a deal tomorrow. The lack of an agreement (and therefore continued production at current levels) would be a very bearish development for the oil market.