From CNBC:

There may still be upside for crude oil prices even if the market appears to be let down by a production cut extension by the Organization of the Petroleum Exporting Countries (OPEC), a analysts said Friday.

On Thursday, OPEC announced it would extend cuts in oil output by nine months to March 2018, after November's landmark deal failed to clear a global supply overhang.

The market was disappointed, sending prices nearly 5 percent lower as investors were anticipating deeper cuts.

"This is a bit of an overreaction. Markets are heading towards more rebalancing in Q3 and Q4 of this year ," said Wood Mackenzie's research director for Asia refining, Sushant Gupta.

Crude oil futures were lower on Friday in Asia at 1.20 p.m. SIN/HK time with U.S. West Texas Intermediate and European Brent 0.7 percent and 0.5 percent lower at $48.55 and $51.18 a barrel respectively.

After OPEC's production cuts, Wood Mackenzie expects global supply to increase about 200,000 barrels per day while demand grows at 1.3 million barrels per day.

"There (will be) a meaningful drawdown in inventories," said Gupta.

Oil prices will likely be lifted in the last two quarters of 2017, Gupta added. Wood Mackenzie expects international Brent to average $55 a barrel this year.

That oil prices were falling after OPEC's decision reflect's the oil group's mismanagement in communication as it telegraphed the extension well ahead of its announcement, allowing for profit-taking now after earlier gains, said Bordier and Cie's Chief Investment Officer Bryan Goh.

"Physical markets are moving into balance; we now have three weeks of combined inventories draw in crude, distillates and gasoline so fundamentals speak of faster rebalancing in the market," Goh told CNBC.

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