CNBC's Epperson: Market Bullish On OPEC Cuts

It's official. OPEC countries are going to take another half million barrels of oil supplies out of the market starting Feb. 1.

One analyst called it a "compromise" cut. Another tells me he thinks it's a "very clever move," giving OPEC members time to monitor inventories and crude prices before actually cutting production.

OPEC indicated they would do just that, saying in a statement that members had concurred "on the need, more than ever, for extreme vigilance in assessing the market during the coming months."

The market took the pledged cut as bullish news, especially on the heels of yesterday's inventory report that showed crude, distillate and gasoline supplies all declined last week. Crude futures settled at their highest level in a week.

Heating oil prices climbed and reformulated gasoline futures soared.

Indeed, if OPEC goes through with cutting the amount that the group has promised (1.2 million barrels a day as of Nov. 1, plus 500,000 barrels a day starting Feb. 1), they will have removed nearly 2 million barrels a day from the marketplace.

Trader Ray Carbone of Paramount Options tells me: "That's a lot of oil to come off the markets. At the same time, we've seen product inventories drawdown over the last few weeks, which puts us in a precarious place for heating oil in late winter and then going into the driving season in the spring."

We're definitely keeping our eye on gasoline futures in the week ahead. U.S. gasoline inventories now stand at about 200 million barrels, which is considered tight for this time of year. Meanwhile, gasoline demand usually picks up around the holidays -- often rivaling the summer driving season, says FIMAT's John Kilduff, as folks run back and forth to the malls doing their shopping.

Finally, we are in for longer days at the New York Mercantile Exchange. The NYMEX is extending trading hours for energy futures next year. Open outcry session will start an hour earlier at 9 a.m. ET. (Of course, Globex electronic trading is already available at that time.)