For oil prices that have been retreating for most of the past month, OPEC is shaping up as the last line of defense.
U.S. crude prices have lost more than 11% in four weeks. Oil prices tumbled after data showed U.S. inventories rising and U.S. producers putting more rigs back to work. They continued falling as the dollar rallied, a move that makes oil more expensive for foreign buyers.
But the biggest factor in oil’s retreat, many traders say, has been growing skepticism that members of the Organization of the Petroleum Exporting Countries can reach a deal to cut output at their Nov. 30 meeting.
OPEC leaders have elaborated little in recent weeks on their tentative plan reached in late September to limit crude production to between 32.5 million to 33 million barrels a day.
Meanwhile, cartel members have been pumping at full tilt. Production reached a record 33.83 million barrels a day in October, according to the International Energy Agency. That means OPEC would have to cut back more than 800,000 barrels day to reach its stated goal.
The group’s behavior is raising doubts that it is prepared to reach a deal that will cut output deep enough to rebalance a market that has been well oversupplied.
“Fundamentally, I see very little reason for a rally anytime soon outside of OPEC,” said Mark Anderle, director of supply and trading at TAC Energy.
OPEC may be getting the message.
U.S. crude futures rallied 5.75% on Tuesday following media reports that cartel members are working on details of their proposed production cut. That was oil’s biggest one-day percentage gain since April.
Prices began to rise again Wednesday after Russian Energy Minister Alexander Novak indicated that Russia is ready to support an OPEC deal. But without new evidence of progress, his comments were not enough to outweigh new data showing swelling U.S. supplies, and U.S. oil prices sputtered, losing 0.5%.
The group’s pledge to rein in output has been one of the few recent bright spots for oil. Crude prices climbed more than 15% to $51.60—their highest settlement price since July 2015—during the three weeks after OPEC announced its plan to cut production. Those gains enabled crude to pierce the price ceiling of around $50 that had held since April.
But oil mostly has sat out a post-U.S. election rally, which has boosted the price of stocks, industrial metals and other assets that rose in response to President-elect Donald Trump’s fiscal-stimulus proposals that the markets hope will bring economic expansion and inflation.
Now the growing concern is that a lack of OPEC follow-through on its pledge to cut could drag prices below the $40 floor that has also held for months.
“Supply is rearing its head again,” said Kris Kelley, an energy analyst at Janus Capital Group. “Now the onus to cut production is a lot higher.”
A report released Wednesday by the Energy Information Administration showed that U.S. crude-oil stockpiles rose by 5.3 million barrels for the week ended Nov. 11 to 490.3 million barrels, which is above the upper limit of the average range for this time of year.
Skeptics point out that, even if OPEC members reach an agreement, previous efforts to reduce output weren’t always well-enforced. Countries often traded accusations of cheating.
“It’s been such an ineffective cartel for so long, I don’t think people are going to believe it,” Mr. Kelley said.
OPEC representatives didn’t respond to requests seeking comment.
Others worry that a cut could result in only short-term price gains, eventually triggering more output from U.S. shale companies that many analysts view as the new swing producers.
Analysts say this is already showing up in domestic production. U.S. output jumped 2% in the week ended Nov. 4, though it fell slightly last week, the Energy Information Administration said Wednesday.
Not all investors are this pessimistic. Nick Koutsoftas, portfolio manager at Cohen & Steers, said many investors have already prepared for the OPEC deal to collapse. In the week ended Nov. 8, money managers added a record number of bearish bets on oil, 82,791 new positions, according to Commodity Futures Trading Commission data released Monday.
That could lead oil prices to hold or even rise, no matter what OPEC does on Nov. 30. Mr. Koutsoftas expects crude prices could return to $50 a barrel by year-end, with oil demand catching up to supply by the end of next year.
“Even if they did absolutely nothing, I think the market has already discounted that, and that’s what we’ve seen over the last month with the price of oil coming down,” Mr. Koutsoftas said.
Some analysts think that demand has already caught up to daily supply, at least excluding the excess capacity in storage. PIRA Energy Group said global crude supply is already 400,000 barrels a day less than demand, a shortage likely to grow next year.
Others say focusing on OPEC misses the point. Because most of the cartel’s members are already pumping as much as they can, there is little risk that the floodgates will open in the absence of a production agreement, said Robin Wehbé, portfolio manager at the Boston Company Asset Management.
“The narrative now is we’re looking for OPEC to save the market, and everyone feels it’s in OPEC’s hands,” Mr. Wehbé said. But “the reality is, they lost the ability to control the market a decade ago.”