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Published: Sept 26, 2016 7:38 a.m. ET

Analysts believe OPEC is under increasing pressure to take action to support prices.


The market is looking for progress on an oil deal this week

Crude-oil futures rebounded on renewed hope that major producers might make progress on a deal to limit production and help whittle down the glut that has kept prices in the doldrums for more than two years.

Brent crude LCOX6, +2.16%   , the global oil benchmark, rose 1.5% to $47.18 a barrel on London’s ICE Futures exchange Monday. On the New York Mercantile Exchange, West Texas Intermediate futures CLX6, +2.07% were trading up 1.3% at $45.05 a barrel.

Oil prices sank 4% on Friday in the New York session after Saudi Arabia said it didn’t expect the Organization of the Petroleum Exporting Countries and other prominent non-cartel producers, such as Russia, to clinch a deal on Wednesday when they meet on the sidelines of an energy conference in Algeria.

However, analysts still believed that OPEC was under increasing pressure to take action to support prices.

“Whichever way you slice it, OPEC has to cut production or else the market will not draw down the overhang accumulated over 2014 and 2015 even next year,” said consultancy Energy Aspects.

Since OPEC announced the meeting back in August, Brent oil prices have seesawed between $45 and $50, largely driven by comments by different oil ministers and leaders.

“Once bitten, twice shy. We have been burned before, and we are not seeing any solid evidence that this time they will agree to a deal.”

Ben Le Brun, OptionsXpress

For more than two years, global oil markets have been beleaguered by oversupply that has kept prices below $100. As major producers continue to prioritize market share over prices, many analysts don’t expect to see a deal this week. OPEC has already failed at several attempts to impose some sort of production cap this past year.

“Once bitten, twice shy. We have been burned before and we are not seeing any solid evidence that this time they will agree to a deal,” said Ben Le Brun, a market analyst at the Australia-based OptionsXpress. “We are all approaching this meeting with caution.”

OPEC’s own monthly report in August noted non-OPEC supply will likely gain by 350,000 barrels a day in 2017, an upward revision from the previous estimate due to the stronger-than-expected resilience from the U.S. shale producers. According to industry group Baker Hughes, the number of rigs drilling for oil in the U.S. rose by 2 to 418 in the week ended Sept. 16.

The oil-rig count has generally been rising since the beginning of the summer, as many oil producers believe drilling in some parts of the U.S. can be profitable even with oil prices in the range of $40 to $50 a barrel over the past six months.

Another risk is the recent resumption of oil production and exports in Nigeria and Libya, which should lead supplies higher, said Barnabas Gan, an economist at OCBC.

“Even if a production freeze agreement were signed, this would change very little from a fundamental perspective, given that most OPEC members are already pumping close to their peak capacity,” said BMI Research.

Nymex reformulated gasoline blendstock RBX6, +2.11%  — the benchmark gasoline contract — rose 1.9% to $1.38 a gallon.

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— Benoit Faucon and Summer Said contributed to this article.