Is this oil rally coming to an end?

Crude benchmarks posted steep losses last week in the wake of the incredibly bearish assessment from the IEA. The losses continued on Wednesday and Thursday after the EIA reported a surprise uptick in crude inventories. However, oil regained some ground in early trading on Friday on hopes that OPEC would extend its production cuts.

Saudi Arabia’s energy minister tried to assuage oil market concerns about OPEC’s actions. “We need to recognize that at the end of March we’re not going to be at the level we wanted to be, which is at the five-year average,” Khalid al-Falih said in a Bloomberg television interview Thursday. “That means an extension of some sort is needed. My preference is to give clarity to the market, and announce on Nov. 30 what we are going to do.” But the problem is that the oil market has already baked in the cuts into current assumptions. “Anything apart from an extension to the end of 2018 is likely to send the oil price into an immediate tailspin,” analysts at Commerzbank said. “In our view, the key factor in the supply-demand equation is the U.S. shale sector—something OPEC is keen to play down through its constant comments on the agreement to cut production.”

Oil prices fell on Tuesday in early trading, a sign that investors could be pocketing profits after building up huge net-long bets on crude futures. As those traders back out of bullish positions, they could be forcing oil prices to trade down a bit.

In the IEA’s latest report, the agency says that the U.S. shale boom is far from over, and in fact, by 2025, the increase in supply will equal what Saudi Arabia achieved at the height of its oil boom. Similarly, the expansion of U.S. natural gas supply will exceed what the Soviet Union achieved. “The United States will be the undisputed leader of global oil and gas markets for decades to come,” IEA Executive Director Fatih Birol said in an interview with Bloomberg television. “There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.”

The IEA cast doubt on global demand in its report, lowering its projected demand growth figure for 2017 by 100,000 bpd to just 1.5 mb/d. It also slashed its 2018 forecast by 100,000 bpd, lowering its estimate to just 1.3 mb/d. Lower than expected demand could deflate oil prices.

OPEC continued to report “high conformity levels” in October, with output dipping by 151,000 bpd from a month earlier.

The data provides a strong bit of momentum heading into the cartel’s official meeting on November 30, a summit that most analysts believe will produce an extension of the current production cuts for as long as another year. In OPEC’s monthly report, the group cited falling global inventories as a sign that the production cuts have been a success.

OPEC’s Secretary-General Mohammad Barkindo said that extending the production cuts is the “only viable option” to restore the group’s credibility. There are few signs of an outcome other than an extension at this point. Last week, OPEC raised its forecast for demand for OPEC crude in 2018 by 400,000 bpd, which would imply a sharper drawdown in stocks.

“We are seeing clear indications that the market is re-balancing at an accelerating pace and stability is steadily returning,” Barkindo said. “I am certain that if we had not mobilized ourselves when we did, building consensus and jointly taking action in responding to the crisis, the industry would be in worse condition than it is today.”