The oil price came under heavy selling pressure on Friday as doubts linger about a potential production freeze from OPOEC when they meet on November 30th.
History shows that the Oil cartel has a history of failed deals and the market is also skeptical this time around.
‘’Complying to agreed production limits has historical been a major challenge for OPEC and the market is likely, once the initial rally has run its course, to adopt a wait-and-see approach while we wait for signs that the agreed cuts are being implemented ’’ says Ole Hansen, head of commodity strategy at Saxo Bank.
If a deal is brokered, analysts are concerned that oil could shoot higher which would bring other players into the market that were waiting for higher prices and therefore create an oversupply again according to the International energy agency
"If oil prices rise above $60 a barrel we will see significant production coming," IEA Executive Director Fatih Birol said in an interview this month.
There is also a huge risk that if a deal isn’t reached to cut production the oil price will plummet by up to $10 and remain subdued for some time.