"With the USA rig count increasing for its 17th consecutive week, I think we can safely say that the crude oil battle is well and truly on", said Mr Matt Stanley, a fuel broker at Freight Investor Services in Dubai.
Russia's top producer Rosneft helped prepare the deal and is ready to comply with the extension, according to Russian media.
Russian President Vladimir Putin said extending output cuts for a further nine months was the right thing to do: "We support the proposal". In my opinion, Saudi Arabia and the other cartel members can not afford to do that, but the market hates uncertainty and the "Wall of Fear" must be taken out for oil and the stock prices of upstream oil & gas companies to move higher.
The U.S. rig count rose for the 17th week in a row to the highest level since August 2015 last week, implying that further gains in domestic production are ahead.
"We will have to see how much demand picks up as increasing USA output continues to cap crude prices from rising, despite the efforts made by OPEC and its allies to reduce production", Will Yun, a Seoul-based commodities analyst at Hyundai Futures Corp., said by phone.
"Based on the consultations I have had with participating members I am rather confident the agreement will be extended into the second half of the year and possibly beyond", Saudi Oil minister Khalid al-Falih said at the Asia Oil and Gas Conference in Kuala Lumpur.
"We've come to the conclusion that the agreement needs to be extended".
Since Saudi Arabia chose to flood the market with oil in mid-2014, the Saudi Arabian International Reserves Fund has declined by over $200US Billion.
But, this would depend on how much low-priced USA shale producers would raise production.
It didn't really work, so Opec and a few other producers cut production hoping to revive prices.
Prices are up by 2% since the announcement of the planned extension on Monday, compared with an over 15% jump in the two days following the announcement of the initial cut on November 30, 2016.
United States oil output witnessed a steep growth in the last one year by almost 10% since mid-last year and touched 9.3 million bpd production.
Even so, the IEA does not see global oil markets returning to balance-or the five-year average, which is used to measure the market balance-before the year's end.