Oil rises more than 1 percent, market corrects following OPEC

"Nevertheless, we continued relations, but we should be more accurate", Minister Jabbar al-Luaibi told Rudaw Thursday in Vienna while participating in the OPEC meeting. The talks were, without a doubt, a success.

Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins - some say it is now profitable at less than $50 per barrel. "That is a disaster", he said. Additionally, backwardation - when near-term crude prices are higher than those for later months - will be needed for the cuts to achieve their goal of shrinking an oil inventory glut, and prevent an "unbridled" increase in us shale production, according to Goldman. The problem was not what was delivered, but what appeared to have been promised beforehand, industry analysts said.

Energy investors' expectations were high that OPEC would announce something more than a nine-month extension - perhaps a longer run, a deeper production cut, or the participation by additional countries (Turkmenistan had been thrown around as a possible candidate). Some market participants had priced in more aggressive output cuts from the Organization of the Petroleum Exporting Countries and other producers.

The short term fall in oil prices below $52 immediately after the OPEC meeting is a sign that the recent rally was built on "pretty sandy foundations and the hopes that OPEC would do more cutting and faster", in the words of Neil Wilson, senior market analyst with ETX Capital.

OPEC's latest calculus acknowledges the global clout of shale but seeks to hinder its growth by keeping just enough supply on the market to hold prices below $60 per barrel.

To achieve this, Opec and its partners are relentlessly focused on inventories-and Falih's urge to see the OECD's stockpile drop back to the five-year average. Russia, which effectively is fighting a proxy war with Saudi Arabia in Syria, said on Thursday its energy cooperation with Riyadh would last well into the future. Many OPEC members are dealing with fiscal strains and it's unlikely that they will be comfortable with further drilling restraints.

Oil companies will fully meet the obligations set out in the agreement, Novak said.

This will offset the cuts by Opec members, who, this week, agreed to extend their supply restraint agreements for another nine months to the end of March 2018.

Yet he said the wild card for the oil market has been the growth in US crude production, particularly from shale.

Another washout looks likely now as global markets remain oversupplied, inventories are bloated, and US producers have aggressively lowered their all-in production costs.

No sooner had the dust settled after the conclusion of the latest OPEC meeting (with oil traders selling the market like hot cakes), we got Saudi oil minister Khalid Al-Falih saying that exports to the United States were dropping measurably.

"Officials from 24 countries deemed it appropriate to extend the deal for nine months as the six-month period does not fully cover the winter season, when prices change frequently", he explained. Russian Federation also added to the expectations by saying this week that cuts could be prolonged by 12 months.