Many analysts expect OPEC and its partners to extend their current production agreement by three months when they meet later this week, but J.P. Morgan analysts expect further cuts of another 300,000 barrels a day.
The J.P. Morgan analysts said their base case now is that the deal will be for cuts of 1.5 million barrels a day, extended through June. The ongoing agreement between OPEC, Russia and other non-OPEC producers is for a 1.2 million barrel a day reduction. That deal was set to expire in March.
OPEC and Russia and other producers, or OPEC plus, meet Thursday and Friday in Vienna.
The J.P. Morgan analysts said they held a conference call with Jaafar Altaie, managing director and founder of Manaar Energy, on the OPEC plus outlook. Their main takeaway from the call is that Manaar expects OPEC to agree to deeper cuts. Manaar expects Saudi Arabia's oil minister to commit to production of 10 million barrels a day, down from its current quota of 10.3 million barrels a day.
Larger cuts should make the market tighter and help boost prices.
The J.P. Morgan analysts said they also understand from Manaar that OPEC has been focused on the growth of U.S. shale production and wants no more "free passes" for U.S. producers.
U.S. shale production has surged to 12.9 million barrels a day, while OPEC and its partners have held oil off the market. U.S. oil exports also increased by about 1 million barrels a day this year, boosting market share at the expense of OPEC and others
Goldman Sachs oil analysts expect OPEC plus to keep its production cut at current levels and to extend them through June, when the OPEC plus group is next scheduled to meet. The Goldman analysts expect oil prices to be choppy around this week's meeting because there is so much uncertainty about what the producers will do.
"Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful 3 month extension is unlikely to provide much upside to current prices," the Goldman analysts wrote. They noted that Brent should trade around $60 per barrel in 2020, absent any geopolitical shocks.
Brent futures were trading just over $61 per barrel in afternoon trading, while West Texas Intermediate crude was around $56 per barrel.according to Goldman Sachs energy analysts.
The J.P. Morgan analyst said Saudi Arabia would like to see a higher price, and its fiscal 'comfort level' for near-term Brent is around $60 to $70 per barrel.
Saudi Arabia has been bearing the brunt of the cuts, while some members, like Russia, Nigeria and Iraq, are still not in complete compliance. Oil analysts have expected OPEC plus to continue pressing members that are not holding to production quotas.
The Goldman analysts note that Saudi Arabia may not even want to extend the deal until there is better compliance.
"With several participating countries still not meeting their commitments, Saudi may not want to guarantee market balance on its own, delaying an extension to secure greater compliance first. This push for compliance may be further complicated by Russia's comments that its quota should exclude condensates," the analysts wrote.
Russia has been angling to have its condensates excluded from the deal, and base cuts only on crude oil production, not byproducts.
The Goldman analysts said if the current quotas are extended longer than expected that would be bullish, and it would help Saudi Arabia curb its over compliance in the second half of next year.
On the other hand, if the producers hold off on making a decision on the extension and do nothing, that would be initially bearish.
"A lack of agreement this week would not lead us to change our expectation that the cut would eventually be implemented through 2Q20, to help keep the market balanced and preserve backwardation, which is finally starting to benefit OPEC," they noted.
When the market is backwardated, it means that oil is trading at higher prices currently than forward futures contracts indicate. Backwardation also suggests that the market is getting tighter..
--CNBC's Michael Bloom contributed to this report
