Oil prices rose around 1 percent on Monday as OPEC moved closer to an output cut to rein in oversupply that has pressured prices for over two years.
Brent crude futures were trading at $47.31 per barrel at 0743 GMT, up 65 cents, or 0.96 percent, from their last settlement.
U.S. West Texas Intermediate (WTI) was up 0.9 percent, or 41 cents, at $46.10 a barrel.
Traders said that markets were being supported by advancing plans by the Organization of the Petroleum Exporting Countries (OPEC) to cut production following over two years of low prices as a result of output exceeding demand.
“Crude oil will continue to be driven by headlines as the 30 November meeting regarding production cuts draws closer,” ANZ bank said.
Agreeing deal terms has proved tricky as some producers, including Iran, are reluctant to cut output.
But an agreement has become more likely as Iran, keen to regain lost market share following years of sanctions which were lifted in January, was expected to be given an exemption if it agrees to at least cap production. This would leave the onus of an outright reduction on other OPEC-members, including its political rival and de-facto OPEC-leader Saudi Arabia.
“I think there will be some kind of agreement next week,” said Matt Stanley, a fuel broker at Freight Investor Services in Dubai, although he added that a post-agreement rally would be unlikely to last as any cut would probably not be big enough to bring oil production back in line with consumption.
Barclays also said some form of deal was likely, and also said that an agreement would have little impact.
“We expect OPEC to agree to a face-saving statement … (but) U.S. tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut,” the bank said.
Beyond the talk of a potential production cut, there were also signs of market weakness.
Japan, the world’s fourth biggest oil consumer, reported a fall of 9.5 percent in crude imports in October, to 2.78 million barrels per day.
Traders said U.S.-dollar swings would also be important for oil markets.
Attracted by a likely interest rate hike towards the end of the year, the dollar last week hit its highest rate in over a decade against a basked of currencies.
A strong greenback can stall oil demand as it makes dollar-traded fuel purchases more expensive for countries using other currencies at home. (Reuters)