[Editor's note: This is a developing story. Last updated at 3:47 p.m.]

OPEC agreed on Wednesday to reduce its oil output to 32.5 million barrels per day (MMbbl/d) from the current production levels of around 33.24 MMbbl/d, two OPEC sources told Reuters Sept. 28.

The producing group will agree to concrete levels of production by each country at its next formal meeting in November, the sources said. One source also said that once production targets were reached, OPEC would reach out to non-OPEC producers for cooperation.

In the third quarter of 2014, just as oil began its fall, OPEC output averaged 31.46 MMbbl/d, according to the International Energy Agency (IEA).

Crude futures moved $1/bbl higher by 11:30 a.m. CT as indications began to point to OPEC action.

However, Andrew Fletcher, senior vice president of commodity derivatives at KeyBank National Association, told Hart Energy the market remains oversupplied and the initial upswing in price was “a knee jerk reaction" to the agreement.

He added that while such news is welcome, “OPEC needs to keep their resolve, which has been somewhat questionable in the past.”

OPEC flooded the market in August with 33.47 MMbbl/d as Middle East producers opened the taps. Kuwait and the United Arab Emirates (UAE) hit their highest output ever and Iraq lifted supplies, IEA said. Saudi Arabia output held near a record, while Iran reached post-sanctions highs.

It remains unclear how the freeze would impact U.S. shale producers, which has already seen a 33% recovery in the U.S. rig count.

The Department of Energy oil inventories report showed that crude in storage held essentially flat, said Roger D. Read, senior analyst at Wells Fargo Securities.

The Energy Information Administration (EIA) reported U.S. crude inventories of 502,716 thousand barrels of oil equivalent (Mboe), a decrease of 1,882 Mboe compared to the prior week. The five-year average inventory is 376,887 Mboe.

Ahead of the OPEC deal, Goldman Sachs analyst Damien Courvalin wrote in a report that collaboration between OPEC members won’t change overarching weakness in oil fundaments.

“Our production forecast continues to reflect a seasonal Saudi production decline into year-end and no growth elsewhere—the equivalent of a deal—with OPEC excluding Libya and Nigeria production growth, only resuming in 1Q 2017,” Courvalin said.

Goldman Sach’s fourth-quarter 2016 oil supply-demand balance is weaker than previously expected given upside surprises to third quarter production and greater clarity on new project delivery through the end of the year.

“This leaves us expecting a global surplus of 400 Mbbl/d in the fourth quarter versus a 300 Mbbl/d draw previously,” Courvalin said.

The firm’s 2017 outlook remained unchanged with demand and supply projected to remain in balance as growth remains resilient while greater than previously expected declines hit production in the U.S., Mexico, Venezuela, Brazil and China. A ramp up of new projects next year will push back against declines, with new volumes expected from China, Russia, Kazakhstan and the North Sea.

Overall, a deal in Saudi Arabia production and a freeze elsewhere could support prices near term but would otherwise fit in the pattern of the kingdom’s seasonal production pattern and Iran’s recent lack of oil growth. Prices would also remain dependent on potential disruption reversals in Libya and Nigeria.

Darren Barbee can be reached at dbarbee@hartenergy.com.