Another thorn in the side of the deal between the Organization of the Petroleum Exporting Countries and other producers has been the U.S. shale industry, which has turned the pumps back on as the production deal pushed oil above $50. The U.S. is now producing more than 9 million barrels a day. A surge in supply in the weekly U.S. inventory data helped kick off what's been a more than 10 percent decline in oil prices. Al-Falih last week said OPEC welcomed shale drillers back to the market. But he also said he is monitoring the activity.
"Green shoots are here in the U.S. and maybe growing too fast. I am moderating the watering of green shoots," he said.
Cohen said he expects OPEC to ultimately extend some sort of deal. "Our view is still one that sees an agreement in some form in place and we have not really wavered from that view," he said. "The reason is based on the fact that completely taking their hand off the wheel again is not something consistent with what many OPEC leaders want."
Oil tanked on Tuesday, after a report from OPEC showed higher global inventories despite the deal. "That OPEC report was a bit of a shock with the Saudis self-reporting a 10 million barrel a day production number. The secondary sources had them producing under 10 million. The market reacted badly to that and the acknowledgement that global inventories were rising," said John Kilduff of Again Capital.
"There was the headline acknowledgement and prices sold off ... I think they're going to engineer another price collapse, they've got to do more than that. It's got to be in everybody's face. I think the real wake-up call is when you break $35."
Croft said oil prices will be more volatile until there are more signs of harmony among the key producers. Crude could also take another down leg if the U.S. weekly supply data released Wednesday at 10:30 a.m. ET shows another big build. West Texas Intermediate futures were down for a seventh day Tuesday, falling 1.4 percent to $47.72 per barrel. Brent, the international benchmark was at $50.90 per barrel.
"I kind of feel like this is Saudi cracking the whip ... not threatening to pull out of the deal but leaving roll over up in the air," said Croft.
Russia's energy minister, Alexander Novak, also said last week that it was too soon to say whether the deal, agreed to in December, would be extended but he and others all spoke in support of it. "They don't want $60 [oil] but firming the case for $50 makes sense for their key policy priorities. Are you going to pick keeping as much shale as you can on the sidelines? Or are you going to pick your key economic priorities? If it's sub $50, or $50, I think they roll this over."