Oil prices have surged on reports that two of the world’s biggest producers have reached consensus on an output freeze ahead of a meeting planned for Sunday in Doha, Qatar at which more than a dozen oil exporters hope to agree a policy that will establish a floor under prices.

Brent crude inched as high as $44.69 a barrel while US benchmark, West Texas Intermediate (WTI) traded as high as $42.17 before profit-taking ensued. Mild strengthening in the US dollar in which commodities like oil and metals are priced also added downward pressure.

Some commentators believe that, with prices more than 40% above the January lows, there is little call or need for an output freeze but Monica Freeman, chief markets strategist at Monex BMO Securities disagrees.

“The reason that prices have tracked as high as they have is precisely because of the prospect of an output freeze. The global economy hasn’t picked up, the falloff in US production and the reduced number of US drilling rigs in operation aren’t enough, by themselves, to keep prices north of $40. It’s the prospect of a freeze that’s doing the heavy lifting here,” she explained.

Monex BMO Securities believes any freeze would be difficult to enforce because exporters were primarily concerned about their own interests rather than those of the industry as a whole. “Frankly, we think talk of output freezes are just that, talk. We believe the oil exporters are borrowing from the Federal Reserve’s policy toolbox and using rhetoric to manipulate expectations,” said Freeman.

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