Non-Opec compliance has been a concern with some estimates suggesting only 60 per cent compliance so far.
What's more, as Sugandha Sachdeva, assistant vice-president and in-charge (metals, energy and currency research) at Religare Securities Ltd, points out, sentiments have further soured as Opec in its recent monthly report increased its 2017 forecast for oil production outside the group, which indicates the oil markets may take long to move close to balance.
The Saudi Arabian minister of petroleum, Khalid Al Falih, was in the United States this week where he continued to call for full compliance, reminding all players of the bigger picture for sustained economic growth. The OPEC production cuts reduced Brent supplies, and the energy friendly administration has helped grow domestic supply and increased the perception that supplies will continue to grow in the future. The bullish outlook that prevailed for most of the last few months has been undercut by persistently high inventory figures, and was instrumental in herding speculators to the exits in the latter half of this week.
The market needs time for the full impact of the big supply cuts under the output reduction agreements to be felt. "But today, we have a little bit of cold water being poured on this constructive sentiment by Russian Federation".
April West Texas Intermediate crude rose 11 cents, or 0.2%, to $48.86 a barrel on the New York Mercantile Exchange. Prices were up 0.6% this week. Total volume traded was in line with the 100-day average.
Brent crude was up 5 cents, or 0.1 percent, at $51.79 per barrel at 0353 GMT, after closing the previous session down 7 cents, and was on track for a weekly gain of about 0.8 percent.
Responding to rising production, benchmark crude prices LCOc1 are down 10 percent since January, and analysts warn that more falls could follow. Participants emphasized the goodwill atmosphere this year and efforts of OPEC officials, who have been smoothing over differences between the organization and US shale companies to calm the markets. "However, he did reiterate that the market is now going in the right direction and fundamentals had improved".
Russian Federation trimmed its oil production by 160,000 bpd to mid-March, Novak told reporters in Moscow. On the other hand, it hit a low of 8,428,000 bpd for the week ending July 1, 2016-the lowest level since June 2014. Late trading did see a surge in prices after American Petroleum Institute reported a decline of 531,000 barrels in USA oil inventories last week, which was in contrast to analyst reports that predicted a massive 3.5 million barrel surge in production.
Even so, many financial speculators and analysts remain upbeat that OPEC and its allies will rebalance the market.
On Thursday, U.S. crude tumbled below $50 a barrel for the first time since December.
A report from the International Energy Agency stated the buildup in the level of unabsorbed crude oil should not be surprising considering OPEC members were increasing their production "relentlessly" before the deal was reached in November.