As per a Reuters poll estimate Russia's crude oil production will hit new highs in the second half of 2017 after the production cut deal expires in June 2017.
Producers outside the Organization of Petroleum Exporting Countries including Russian Federation pledged to cut around 600,000 barrels a day.
"We're seeing a strong reaction and a change in mood", Singapore-based IHS Energy vice president Victor Shum said. Gulf producers need money to balance the budget.
"The market makers - the traders - are not fully convinced that OPEC and collaborating countries like Russian Federation will renew the cuts which they agreed in Novemeber". Once that gave way, a key Fibonacci retracement and the low of the year were on the horizon, before paving the way to $45 a barrel.
Brent clawed back to $46.86 a barrel nearly two dollars better off than its overnight low, but the scars left it an eye-watering 6 percent lower than at the start of the week. It is set to be the fourth weekly fall on the trot for the greenback which is now at its lowest since November.
That's put the ball back in OPEC's court.
QUOTEWORTHY: "The collapse in oil prices saw (benchmark West Texas Intermediate) plunge as the market continues to probe for a bottom amid oversupply concerns", said Stephen Innes, senior trader at OANDA.
Uncertainty around oil prices has plagued producers over the past two years who, despite improving results in the first quarter of 2017, remain under heavy debt loads and short on capital-raising options. "Right now, it is all about supply and not demand".
Even though the cartels production fell by 1.6 million barrels per day from its peak in November and fell for the fourth consecutive month in April, the increase in United States shale production, inventories and rig count have single-handedly offset the efforts of the cartel to push crude prices. USA production is at its highest since August 2015. Some countries, including the U.S., actually increased production levels. They have remained somewhat stubbornly high.
Commercial U.S. crude inventories in the week to April 28 fell by 0.9 million barrels, marking the fourth week of declines. America now has a whopping 527.8-million barrels of stock. "This lack of faith seems to have dawned on the market", Smith said.
On Wednesday, a day after the American Petroleum Institute (API) injected a bit of optimism among traders by reporting a crude oil inventory draw of 4.2 million barrels, the U.S. EIA once again poured cold water on the oil bulls by reporting a much smaller decline - 900,000 barrels - against expectations for a decrease of 2.3 million barrels. The surge shows how a mix of cost-cutting and assets sales - plus the tailwind of new output from projects approved several years ago - helped companies to survive and then thrive with prices that are less than half what they were a few years ago.
Grisanti expects oil to average between $50 to $55 this summer.
Traders were also encouraged by hopes for an oil output cut extension.
So far compliance has been well above what was originally expected, but some countries are exempt while other producers, like Iran, have been accused of massaging their production numbers. "While drilling has been strong, we have yet to see the same level of activity in completing wells, which will limit the aggressiveness of growth".
"What we've seen in terms of the rebound today is really just a bit of a correction following an oversold market over the past several days", Michael Tran, a commodities strategist at RBC Capital Markets in NY, said by telephone.