While oil rose on Monday, the Dow and S&P 500 were lower for the first time in four days, as the "Trump trade" took a breather. The Dow was off 54 points at 19,097, and the S&P was off a half-percent at 2,201. But the Russell 2000 fell the most, losing 1.3 percent after its stunning 15-day winning streak, its longest in 20 years.
Bond yields also fell Monday, and the dollar was lower against major currencies. Gold gained more than 1 percent on its best day in three weeks. West Texas Intermediate crude futures ended at $47.08 per barrel, a gain of 2.2 percent.
Besides OPEC headlines, there are several economic reports due on Tuesday – third-quarter GDP at 8:30 a.m. ET, S&P/Case-Shiller home prices at 9 a.m. and consumer confidence at 10 a.m. There are also Fed speakers, including New York Fed President William Dudley, speaking in Puerto Rico at 8:15 a.m. ET. Fed Governor Jerome Powell speaks at 12:40 p.m. ET. Earnings are expected from Tiffany, AutoDesk and Splunk, among others.
But it's the outcome for oil prices that markets are waiting for on Tuesday. OPEC embarked on a strategy of letting the market set prices two years ago, in an effort to end a world oil glut by forcing out high-priced production.
Instead, the cartel and other producers drilled even more, sending prices crashing amid an oil glut. U.S. shale producers felt the pain and did close wells, cutting back drilling by about a million barrels a day from the 2015 peak. The industry has since been reopening wells and rig count has begun rising, but production would increase at a much faster pace if oil would stay above $50 and move toward $60 per barrel as analysts have been expecting.
Iran is at the heart of the current disagreement, just as it was when OPEC failed to strike a freeze deal in April. Analysts say Iran is so far not willing to cut production and is holding to the view that it was exempted from the requirements of the deal. Iran has been trying to regain its market share, after sanctions against its nuclear program were lifted. Saudi Arabia, meanwhile, scuttled the earlier deal because Iran would not agree to participate.
Many analysts on Monday still expected OPEC and other producers to come out with some semblance of a deal on Wednesday.
"Something's got to give here, and the recipe for Saudi Arabia and Iran to come to the table and put something together is getting more difficult. We should all prepare for big oil price gyrations in the next few days," said Michael Cohen, Barclays' head of energy commodities research.
Iran, with output at about 3.7 million barrels a day by some measures, is close to reaching the maximum it can produce, though its goal is to reach 4 million barrels a day, analysts said.
"Will there be a deal? I think yes. There will be some type of optic where it looks like Iran does something," said Helima Croft, head of global commodities strategy at RBC.
Meanwhile, traders in other markets were keeping an eye on oil.
"There are four things traders are watching this week, and tomorrow, oil is first on the agenda," said Scott Redler of T3Live.com, who follows the stock market's short-term technicals. He said the Wisconsin vote recount was also being monitored in case it became a bigger issue. Traders were also watching action in the Italian banks, which sold off Monday, as Italy gets closer to its constitutional referendum Sunday.