Wood Mac: Don't expect an OPEC-fueled rally in crude oil prices

Saudi Arabia's energy minister, Khalid al-Falih, said fellow ministers did not see a need to reduce oil output further.

OPEC and other producers had been widely expected to agree to extend a cut in oil supplies of 1.8 million barrels per day (bpd) until the end of the first quarter of 2018.

Oil prices dropped more than 4 percent as the market had been hoping oil producers could reach a last-minute deal to deepen the cuts or extend them further, until mid-2018. But the hoped-for benefits could be short-lived.

Jamie Webster, an oil market analyst from the Center on Global Energy Policy at Columbia University, told Xinhua that the shale oil in U.S.is playing an important role in the oil market.

Gary Ross, head of global oil at PIRA Energy, part of S&P Global Platts, said: "Russia has an upcoming election and Saudis have the Aramco share listing next year, so they will indeed do whatever it takes to support oil prices". The curbs were meant to last six months from January, but confidence in the deal, which boosted prices as much as 20 percent, waned as inventories remained stubbornly high and USA output surged.

Novak said OPEC and non-OPEC oil exporting partners had instruments in place to tackle a collapse in oil prices, in an interview with CNBC on Thursday.

Maintaining production and export discipline in the second half of 2017 will be OPEC's most important priority, according to Bernstein.

Commerzbank cited data from the U.S. Department of Energy saying U.S. production was roughly 540,000 barrels per day higher in mid-May than at the start of the year.

In this regard, the aforementioned non-OPEC countries chose to extend their production adjustments, which originally started January 1, 2017, for a further period of nine months, beginning July 1, 2017.

WATCH: Can OPEC still control the oil market? .

"Nine months was priced in", Sen said.

Yet rising supply is partly due to USA shale oil producers primarily from Texas, which have been happy to pump with abandon as improving technology and steady prices boosted returns.

Energy consultancy Wood Mackenzie said keeping existing oil output at current levels for another nine months would result in a 950,000 bpd production increase in the United States, thus undermining OPEC's efforts to balance supply and demand.

Oil fell below $50 after OPEC stuck to the most predictable outcome at a meeting in Vienna. "Importantly, most of the reduction in OPEC exports to the OECD has been concentrated in reductions of crude exports to the U.S".

  • Zachary Reyes