Oil prices rose more than 2% on Tuesday, bouncing back from multi-month lows on expectations that OPEC will agree later this month to cut production to reduce a supply glut.
North Sea Brent crude oil was up $1.05 a barrel at $45.48 by 10.45 GMT after hitting a three-month low of $43.57 on Monday. US light crude was up $1.15 a barrel, or 2.7%, at $44.47. It reached a three-month low of $42.20 on Monday.
Oil producers in the Organisation of the Petroleum Exporting Countries are due to meet on 30 November to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.
OPEC is a diverse grouping, politically and economically, and several members wish to increase production.
Saudi Arabia’s energy minister has said it is imperative OPEC reach a consensus on a deal to curb production, Algeria’s state news agency APS said on Sunday.
“Reports of a diplomatic push by OPEC to strike a deal are supporting the markets,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. “The rally could last a little while but the underlying fundamental picture is still bearish.”
IG Group market strategist Jingyi Pan said market sentiment has been buoyed by reports that key producers including Iran and Iraq were thinking about restraining production.
“News of Qatar, Algeria and Venezuela leading the push for the OPEC deal were music to the ears for oil traders, boosting crude oil prices,” Jingyi Pan said.
Prices were also buoyed by expectations that US shale oil production will in December fall to its lowest since April 2014 at 4.5 million barrels per day (bpd).
Technical analysts said oil markets were due to an upward correction after a month of falls.
Philips Futures investment analyst Jonathan Chan in Singapore said crude prices were supported by short-covering.
“The current active contract (for US crude) is expiring. The last trading day is next Monday, so some oil traders are already starting to close out their positions to roll over,” Chan said. But rising Libyan oil production could cap gains.
A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday. Libya’s oil production has almost doubled to around 600,000 bpd in recent weeks.
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