Oil prices have dropped after the Organization of Petroleum Exporting Countries (OPEC) announced plans to extend output cuts by a further nine months.

Global benchmark Brent fell by 0.5% to $51.18 a barrel, while the US crude prices decreased by 0.6% to reach $48.57 a barrel, reported Reuters. 

The oil market also suffered due to the fall in British currency after reports showed that UK economy slowed down more than estimated.

OPEC and other key producers agreed to extend the ongoing supply cuts of 1.8 million barrels a day to March next year.

The move was expected as many countries such as Saudi Arabia and Russia voiced their support for the extension. Although many investors expected that the oil cartel will deepen the amount of supply cuts to rebalance the market. 

ETF strategist Nizam Hamid said that result of the meeting has disappointed the investors. The move also highlights heightened volatility in the oil market.

"The price could conceivably hit $60 barrels by year-end."

Hamid stated that only decisive action from OPEC will boost prices from current levels, which is constantly facing the challenges of increasing US shale output.

Cantor Fitzgerald Europe oil and gas research director Sam Wahab said: “Both Brent and WTI traded around one-month highs ahead of the OPEC meeting, but were tempered when Saudi Arabia’s oil minister played down further reductions in any new OPEC output deal.

"Following the meeting, we have seen both Brent and WTI trading lower on the news as a proportion of the market had priced in the potential for deeper cuts. However, this failed to materialise, a case of buying on rumor and selling on facts.

"There seems to be a little resistance on the price at $55/bbl, but if OPEC members and a selection of non-OPEC members, notably Russia, abide by the supply cut, the price could conceivably hit $60/bbl by year-end."