Oil prices have bounced around ahead of an informal meeting of members of the Organisation of the Petroleum Exporting Countries with non-OPEC countries including Russia on the sidelines of the International Energy Forum in Algiers from Monday to Wednesday.

Prices initially shot up last week after key OPEC members Saudi Arabia and Iran met for advance talks, sparking speculation an agreement to curb production was on the cards. But Brent lost most of those gains on Friday, slumping 4 per cent to end the week at $US45.89 a barrel, amid growing signs the two arch-rivals were making little progress.

Smaller OPEC producers including Ecuador and Venezuela, who have been hit hardest by the price decline, have called for an output freeze to rein in the global oil glut. The Algeria talks will be the third time this year that OPEC countries discuss production curbs, after meetings in April and June ended in failure, mainly due to acrimony between Saudi Arabia and Iran.

Venezuelan president Nicolas Maduro said last week OPEC members were close to striking an agreement but JPMorgan oil analyst Ben Ramsay predicted a breakthrough deal in Algiers remained unlikely.

"Major crude producers are still focused on defending market share more than two years after the start of the oil price collapse," Mr Ramsay said.

Saudi Arabia has over the past years increased production to a new historical record of 10.7 million barrels a day, overtaking Russia and the United States as the world's biggest producer, while Iran remains keen to ramp up its output following last year's historic nuclear deal, which allowed the country to resume oil exports.

Further increasing global supply levels, the US is on track to add the most oil rigs in a quarter since the crude price crash began two years ago, while Nigeria and Libya both want to lift production.

But with the economies of many oil exporters increasingly feeling the sting of lower oil prices and rising debt levels, the likelihood of a future deal had increased, Mr Ramsay said.

"We expect major oil producers increasingly will focus on stabilising oil markets and defending an implicit oil price floor," he said, adding that the levels at which production will be frozen remain contentious.

Commonwealth Bank commodities analyst Vivek Dhar said a statement demonstrating a willingness to co-operate was far more likely in Algiers than any kind of deal curbing production.

"If there is any agreement it will likely be in rhetoric as opposed to action," he said, adding that OPEC itself had described the meeting as one of consultation, not decision making.

He predicted any kind of actual deal targeting production levels was most likely early next year, when Iran hit its proclaimed target of about 4mbd, its pre-sanction production level.

Five options

Mr Dhar, who expects Brent prices to average at $US46 a barrel in the fourth quarter, listed five possible outcomes to the Algiers meeting, ranked according to likelihood and including their anticipated effect on oil prices:

1. Statement that members are on the same page: likely. Price moves up (~$US0-$US2/barrel)
2. Agree to freeze production later: somewhat unlikely. Price moves up (~$US3-$US4/barrel)
3. Meeting ends in disunity. Somewhat unlikely. Price moves down (~$US1-$US3/barrel)
4. Production freeze: unlikely. Upwards price movement (~$US4-$US5/barrel)
5. Production cut: highly unlikely. Big upwards price movement (~$US5-US10/barrel)

RBC Capital Markets global head of commodity strategy Helima Croft said oil producers were much more likely to come to an agreement than earlier in the year, adding she expected an Algiers statement to "strongly suggest a willingness to act" at OPEC's next official meeting in November.

"Many of the biggest and most influential producers are close to maxing out and hence may judge that there is little downside to agreeing to cap output at current levels or sign up again for a collective ceiling," she said in a note to clients, warning that investors should think twice before shorting the oil market.

As to what a future agreement might look like, Ms Croft said she didn't expect OPEC to return to hard production quotas, but said a system that allowed countries to produce within a band or range was the most likely solution, which would be moderately bullish for the market.

"Most notably, a unified cartel would help to install a floor in the market, as quantifiable measures should hold members accountable."