Investors are trying to keep track of the flurry of meetings between oil-producing nations as they urgently try and hammer out a deal ahead of OPEC's official meeting on Wednesday.
Whether the Organisation of Petroleum Exporting Countries will be able to find a consensus is expected to dominate headlines and be the focus of financial markets this week, as will the US jobs report slated for release on Friday.
Australian shares are set to open flat at 5514 points on Monday, despite all four major indexes in the United States hitting record highs at the end of last week, continuing a rally that has lasted for three weeks and lifted everything from banks to industrials and small-cap stocks.
"There seems to be little that will derail this current market rally," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds. "But the price of oil is likely to see some movement this week whatever the outcome of the Vienna OPEC meeting."
Experts have oscillated between agreeing a deal to cut output by between 500,000 to 1 million barrels per day would eventuate and pointing to an inadequate history of OPEC effectively curbing output.
The price of brent crude dropped 3.6 per cent over the weekend to $US47.24 a barrel for its biggest fall in over two months after Saudi Arabia pulled out of a meeting with non-OPEC producers, including Russia, that was slated to be held on Monday.
"OPEC has had a poor track record of reaching agreement recently," said Andrew Mitchell, portfolio manager at Ophir Asset Management.
"While positive for prices, we remain skeptical of the eventual implementation of any deal agreeing a cut."
Activity in Iran and Iraq
Iran and Iraq's participation remain the biggest hurdle to any deal, after a recent meeting settled on production targets for most of the other 14-member countries.
Following the lifting of economic sanctions of Iran in January, Tehran has steadfastly remained committed to returning to pre-sanction levels of output, though current low oil prices pose severe fiscal problems for the oil-reliant nations.
Iraq has tentatively agreed to lower output ahead of this week's meeting, though it has repeatedly requested exemption because of the war it is fighting with ISIS.
"The asymmetry is well on the downside should OPEC nations not come to an agreement," said Gary Huxtable, client advisor at Atlantic Pacific Securities. "The dominoes are lined up in terms of a production cut and subsequent rally in oil likely to further boost global inflation expectations.
"This is likely to create a more difficult environment for investors to navigate through next week."
Investors will be watching for the US nonfarm payrolls report on Friday for an update on the health of the country's labour market. Economists expect 175,000 jobs were added in November, up from 161,000 the previous month, with an unchanged unemployment rate of 4.9 per cent.
"Another healthy report reflecting job growth near its recent trend [175,000-195,000] will give the Federal Reserve added comfort to lift rates in December," said strategists at TD Securities.
"Though the bar for a rate move is low in our view and any print at or above the breakeven pace [roughly 100,000] is likely sufficient."
The market is currently pricing in a 100 per cent chance of a rate hike when the US Fed meets in December.
European Central Bank President Mario Draghi is due to testify before the European Parliament's Economic Committee on Tuesday, and financial markets will be watching closely to see if there are any hints the central bank will curb its bond-buying program.
