Prior to the November 30, 2016 deal, the oil market was in doubt whether Opec would reach any agreement and the average Opec basket of crude oils price for the month was only $43.22 (Dh158.6) a barrel.

But the agreement to reduce production by 1.2 million barrels a day (mbd), which was followed by an agreement with non-Opec countries for a further reduction of 0.6 mbd, acted to push prices up, to December’s average of $51.67. Further gains were seen as commitment and compliance were unusually at a much higher level than either expectation or historical experience.

However, there was little room for prices to rise further as the market was also driven by other developments. Prices fell in March to $50.32 a barrel due to production increases in other non-Opec countries, especially in the US. Daily prices were volatile and as I write the basket price on April 27 is only $48.24 a barrel.

Other benchmark crude prices moved in tandem and, on the same date, WTI and Brent posted $48.97 and $51.44, respectively.

Given that the aim of the November agreement was to “to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward”, one can say that this has met with less than expected success. We still have two more months to the end of the agreement, but OECD commercial stocks were at 2,987 million barrels at the end of February compared with 3,021 million barrels at the same time in 2016 and still 268 million barrels above the past five-year average.

The International Energy Agency (IEA) in its last “Oil Market Report” is expecting a stock build in the OECD bloc of 38.5 million barrels in the first quarter 2017, which may be partially countered by falling stocks elsewhere. While the stock drawdown is expected to improve in the second quarter, it remains to be seen how production increases in countries outside the agreement would counter this expectation.

The IEA said: “The net result is that global stocks might have marginally increased in Q1-17 versus an implied draw of about 0.2 mbd.”

Speculation is rife whether Opec and other producers would agree to extend the agreement by a further six months. Members are generally in favour of this while no positions are yet visible from other producers. Bloomberg reported that ministers of Saudi Arabia and Venezuela plan to meet their Russian counterpart to discuss the extension.

Saudi oil minister Khalid Al Falih has said: “There seems to be a consensus in that direction, but we’re not 100 per cent there. We still need to talk to all countries. A very important country to talk to, of course, is Russia, the biggest non-Opec exporter.”

The IEA said in April that “extending their output cuts beyond the six-month mark would be bigger implied stock draws. This would provide further support to prices, which in turn would offer further encouragement to the US shale oil sector and other producers.”

The improvement of oil prices so far in 2017 by about $11 a barrel over the 2016 average has encouraged a rebound in non-Opec supply, which is expected to be around 0.49 mbd against a decline of 0.79 mbd in 2016 according to IEA. The growth is mainly from the US where “monthly data shows that output reached 9.0 mbd in March, up from a trough of 8.6 mbd in September 2016. We now expect that US production will be 680 kbd higher at the end of the year than it was at the end of 2016.”

There is indeed more to come on this judging by the reported increase in the number of operating rigs in the US.

According to one analysis, “Sharp declines in development costs and advancements in capital efficiency means exploration and production companies (E&Ps) can turn a solid profit even if oil remains in the $50 to $60 per barrel range.”

Prudence is in order and even if production restraint is maintained for the rest of 2017, prices are unlikely to rise beyond the current range of $50-$60. And the decline of oil stocks, while welcomed, is unlikely to remove the overhang in the meantime.

Oil producers know well that failing to extend the current production agreement, pressure of oversupply may send prices tumbling to levels that were already experienced in January 2016. That is below $30 a barrel.

The writer is former head of the Energy Studies Department at the Opec Secretariat in Vienna.