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OPEC news: No action expected from oil minister meeting in Algiers this week

Oil producers are unlikely to settle on any kind of deal in Algeria this week, setting the stage for more volatility in oil prices and postponing hopes for an end to the current supply glut until November.

OPEC members gather in Algiers for the International Energy Forum starting Monday and are expected to hold informal talks following the two-day event. Algeria's oil minister Nourredine Bouterfa has warned prices could drop back into the $30 per barrel range if officials walk away empty handed, but that appears to be the most realistic scenario.

No real decisions will be made regarding an output deal but oil ministers are likely to say they are making progress, a move that effectively postpones any decision making until OPEC's official meeting on November 30, Matt Smith, director of commodity research at Clipperdata, told CNBC's "Squawk Box.'

Indeed, any potential deals are only likely to occur at the official policy meeting in November, echoed Mitul Kotecha, head of Asia FX and rates strategy at Barclays.

Brent crude futures were slightly higher at $46.31 a barrel during early Asia trade on Monday after losing nearly 4 percent in the previous session.

"Expectations have painted the group into a corner not to walk away empty-handed, markets have sufficient cynicism not to expect a concrete deal," Mizuho Bank analysts said in a Monday note.

"The most stirring headline will be an announcement of emergency OPEC meeting after the forum as this might signal that some kind of deal may be close. We see potential for knee-jerk tests of $50 for oil prices."

Efforts to reach an agreement on output cuts have been complicated by the lifting of international sanctions against Iran, with the country planning to sell more oil abroad after years in the wilderness. Saudi Arabia has agreed to lower production only if Iran freezes output, Reuters reported last week, but it remains to be seen if Tehran will be on board.

Riyadh's goal in Algiers is to build a consensus on production that could be drafted into a formal agreement at the November policy meeting, but any output freeze that excludes Iran would be ineffective, noted Azlin Ahmad, crude oil editor at Argus Media.

Iran currently produces around 3.6 million barrels a day but aims to increase that figure up to 4 million.

Strategists widely agree that political discussions are the only way for members to reach a deal.

"If the market is left on its own to balance without a freeze deal, prices won't move from $40-50 range so that will question the credibility of OPEC to control the market," Ahmad continued.

Correction: An earlier version of this story incorrectly summarized the Reuters report that Saudi Arabia agreed to lower production if Iran freezes its output.

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