Oil prices have plunged 27 percent in the last six months. That means the oil cartel may look to cut production to boost prices when it meets at its headquarters in Vienna on Thursday.
How should investors be positioned before the meeting?
According to one oil market watcher, crude prices will likely head down because even some of the expected production cut proposals won't be enough to offset North American shale oil production.
"This is a game of chicken between Saudi Arabia and North America," said Gina Sanchez, founder of Chantico Global. "North America is becoming far less dependent on Saudi Arabia. So Saudi Arabia is waiting to see where our cutoff point is."
Should OPEC not cut at all, Sanchez sees the price of West Texas Intermediate crude falling to $60 per barrel.
"And even if they cut by a million barrels –which is what is expected to be the proposal by Iran—that probably still takes us all the way down to $70," she said.
For crude to reach $80 per barrel again, OPEC will have to take a much bigger action, estimates Sanchez, a CNBC contributor. "It's going to take at least a 2-million-barrel-per-day supply cut, which is right now the current oversupply," she said.
The technicals are also pointing to lower oil, according Todd Gordon, founder of TradingAnalysis.com.
Looking at a long-term chart of crude, Gordon sees support at around $75. He notes that that level had been tested three times since 2011, including now. "Technically speaking, triple bottoms do not hold," he said. "We're going to come back and test it with a lot of momentum. So eventually, I think we break through."
A shorter-term chart shows a slight bounce above the $75 level, but Gordon attributes that to short sellers covering their position ahead of the OPEC meeting. "Technically speaking, I would like to sell into this bounce," said Gordon, a CNBC contributor.
He sees oil trading in a downtrend channel. Thus, even if it bounces to $80 per barrel—a price Sanchez believes is unlikely—Gordon anticipates oil eventually falling below $75.
"I don't think it's going to have legs above the $80 level, but I'm willing to short into $83," he said. "That is the upper end of the downtrend channel that we've seen since the summer of 2014. So I am bearish into $80 and $83. I would be stopping myself at $85."
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