Oil prices whipsawed on Thursday morning as traders reacted to comments from OPEC delegates ahead of a widely anticipated extension of the OPEC-led production cut agreement.
"Nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick," Khalid Al-Falih, Saudi Arabia's energy and industry oil minister told CNBC ahead of the closed-door meeting on Thursday.
Saudi Arabia's delegate explained while all options had been considered ahead of the announcement - including deeper cuts and a possible six-month extension - he suggested reaching an agreement to curtail oil production by a further nine months appeared the "safe bet".
Oil prices contracted sharply just minutes after Falih's comments, with Brent, the international crude oil benchmark, shedding $1 a barrel immediately afterward. Oil's fall is believed to be due to traders feeling disappointed at the lack any deeper cuts to its production. Miswin Mahesh, an oil analyst at Energy Aspects, told CNBC via telephone that "oil prices are always choppy at this point" when OPEC meetings are happening.
He added that the price fall on Thursday morning "was probably triggered" by "imbalances" in the market with some expecting deeper cuts to OPEC production. A nine-month extension was already baked into the price, according to Mahesh.
At around 11.00 a.m. London time, Brent was trading 0.3 percent lower at $53.65 a barrel with the U.S. West Texas Intermediate (WTI) benchmark edging down by nearly the same amount to sit at $50.96 a barrel.
Brent and WTI futures prices have tracked 13 percent and 14 percent higher respectively since this month's lows were reached on May 4, as hopes for a nine-month extension have risen on the back of increasingly supportive comments from Saudi Arabia, Iran and Iraq for such a result.
Nine months would 'control the situation'