"The inability to arrive at a framework for a reasonable agreement after 2½ months of Saudi driven discussions strongly suggests any formal communique to restrain output will be a watered down version," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
Ritterbusch, however, said he believes OPEC had a better than 50 percent chance of reaching an agreement, which should offer some near-term price relief. He noted the burden of actual curtailments would likely fall on the Persian Gulf producers, especially the Saudis.
Documents prepared for a ministerial OPEC meeting on Wednesday propose the group cut production by 1.2 million bpd from October levels, an OPEC source familiar with the papers said.
The papers for the meeting also propose Saudi Arabia reduce production to 10.07 million bpd from 10.54 million bpd in October and that Iran freeze output at 3.797 million bpd, according to the source.
Iran's oil minister earlier on Tuesday said the country was prepared to leave its oil production at levels to which OPEC had agreed at its September meeting in Algeria.
OPEC, which accounts for a third of global oil production, agreed in September to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million bpd to prop up oil prices, which have halved since mid-2014.
OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.
Non-OPEC producer Russia confirmed on Tuesday it would not attend the OPEC gathering, but added that a later meeting was possible.