The world is watching Algiers for signs that oil producers will agree to freeze production, but many analysts see a devastating crude glut persisting no matter the outcome of the meeting.
Oil prices climbed more than 3 percent on Monday ahead of a hotly anticipated statement from OPEC members and other producers led by Russia as to whether they will act to stabilize oil prices. The rally came despite skepticism that the producers would reach a deal as they meet at the International Energy Forum in the Algerian capital.
Goldman Sachs said last week it is looking past the meeting and instead looking toward easing conflicts in Iraq, Libya and Nigeria that could return sidelined crude supply to markets and potentially push it back into glut territory.
"In our view, thawing relationships between parties in conflict in areas of disrupted production would be more relevant to the oil rebalancing than an OPEC freeze, which would leave production at record highs and could prove counter productive if it supported prices further and incentivized activity elsewhere," Goldman said.
Goldman still sees the crude market reaching a supply deficit of 230,000 barrels per day in the final six months of the year, but said a recovery remains fragile.
Its "conservative" estimate calls for returning supply from Iraq, Libya and Nigeria to add 100,000 barrels per day to global supply. But if an additional 500,000 barrels per day were to return, Goldman said, it would reduce its average 2017 price forecast for U.S. crude to $45 a barrel from its current $52.50 projection.