Oil prices have increased after the market priced in an expected production freeze from the Organisation of the Petroleum Exporting Countries (OPEC). 

International Brent crude oil futures rose 1.5% and traded at $49.63 a barrel, while the US West Texas Intermediate (WTI) crude futures rose 0.73% at $48.59 a barrel, Reuters reported.

Analysts are warning that in case the producers fail to agree with the proposal, it may lead to a deepening oversupply by early next year.

"The single most important country in OPEC, Saudi Arabia, wants a production cut."

By 30 November, producer cartel OPEC is set to try and gather its 14 member states and non-OPEC producer Russia to agree on a coordinated production cut in a bid to prop up the market.

RBC Capital Markets told the news agency: "The single most important country in OPEC, Saudi Arabia, wants it (a production cut)… OPEC's leadership is cognisant of the risks posed by failing to reach a deal."

Goldman Sachs said as the producers are required to react to eroding supply and demand fundamentals the chances of an OPEC cut had increased.

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By GlobalData

If OPEC and other producers, especially Russia, could not agree a production cut, oil supply surplus of 700,000bpd is expected for the first quarter of next year.