Prices had jumped by 6% on Wednesday's news that Opec had voted for the first production cut in eight years.
Saudi Arabia, the world's biggest oil producer and Iran's rival for power in the Middle East, appears to be more amenable to some sort of production limit, certainly more so than in April when OPEC failed to agree on measures to curb supplies.
Crude oil prices meandered for most of the trading day Wednesday before ministers from the Organization of Petroleum Exporting Countries emerged from meetings in Algeria with an agreement to take extraordinary action meant to pull the market into balance. Instead of cutting production, OPEC opted to pump at high volumes in an attempt to maintain market share and drive some USA shale oil and gas producers, with higher operating costs, out of business.
Brent North Sea crude for November rose 19 cents to $48.
But Al-Ubaydli doesn't see OPEC keeping its word and said it is merely taking markets on a "cheap ride" with a short-term rally in oil prices.
By year end, OPEC would have been producing an additional 1 million barrels a day versus what it was pumping in August.
Still,"to many consuming nations which have more or less got accustomed to low oil market over the past two years this agreement can be quite a shock", said an oil trading manager at a major Chinese refiner.
Hardman added that the brief oil-price surge "helped to improve investor risk sentiment, lifting global equity markets, particularly shares of energy companies".
"Every member of OPEC has different needs and different budgets and requirements and populations they have to satisfy", said Jerusalim.
The countries agreed to limit production to a range of 32.5 million to 33 million barrels a day, the first cut in production since the 2008 financial crisis, according to the Financial Times.
Commodities analysts meanwhile have warned that Opec producers - led by Saudi Arabia - were no longer in a position to control prices via production volumes, given the dramatic cost efficiencies achieved by shale producers in the USA in the past two years. Novak said that Russian Federation didn't have plans to consult with OPEC members on the issue of oil production until sometime in October and November, adding that earlier talks with OPEC revolved around limited production at current levels, not at reduced levels.
"OPEC has no way of enforcing the quotas", said Jonathan Chan, an energy analyst at Phillip Futures.
The plunge in oil revenues has left Saudi Arabia with a record deficit previous year, prompting the country to cut the salaries of cabinet ministers and freeze the wages of lower-ranking civil servants.
"I believe that OPEC has declared victory in the OPEC production war and they feel confident that they can cut production without fear that the shale oil producers will steal their market share", Phil Flynn, senior market analyst at the Price Futures Group, wrote in his daily energy report. At the most, the possible deal would shave off 700,000 barrels a day and would need to be agreed to by OPEC members. Shale oil and gas requires a higher price to break even.