"The extension alone should result in deeper cuts", he said, stressing that U.S. production would stop the rebalancing of the market this year.
Crude oil prices had been on a steady rise for most of the week on word that parties to a multilateral agreement, coordinated by the Organization of Petroleum Exporting Countries to curb production could be extended into early 2018, instead of year-end 2017.
In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices. Market watchers expect them to extend output cuts of 1.8 million barrels a day until the end of March 2018.
The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market.More news: Almodovar and Smith's comments on Netflix at Cannes
The Organisation of Petroleum Exporting Countries (Opec) may get its members to agree to continue to tamp down oil production, but it will be a Pyrrhic victory. Most members support a proposal by Saudi Arabia and Russian Federation to extend supply cuts for nine months, Algerian Energy Minister Noureddine Boutarfa said Thursday.
Analysts estimate that every dollar that oil prices rise between $45 and $55 a barrel results in an additional 1.2 billion barrels that become economic to produce.
Many spot markets are stronger, suggesting the OPEC cuts are having an effect and making supply a little harder to come by, said Scott Shelton, broker at ICAP PLC.
OPEC didn't give USA shale enough respect In the International Energy Agency's (IEA) latest monthly report, estimated inventories in industrialized nations totaled about 3.025 billion barrels on March 31. However, even after these refineries became operational again, the markets have not seen a considerable decline in the United States oil inventories, as was expected by the industry experts. Although most of the OPEC members seem to be on-board with the decision to further the output quotas, there have been no indications of increasing the amount of production cuts by the cartel yet.More news: FAA's drone registration rule suffers major setback
"The question is whether that 1.8 million barrel cut is enough to cut that overhang".
Still, there are signs that Saudi Arabia, OPEC's largest producer, is keeping markets well supplied.
Crude inventories declined to 520.8 million barrels, the lowest figure for 10 weeks, but stocks are still 2.2% above year-ago levels. Additionally, in the past one year, equity energy and natural resources mutual funds have gained 4.7% and 12.7%, respectively.More news: China building biggest infrastructure project in history
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