Oil rose 1.3 percent to above $50 a barrel on Monday, giving up early gains, as worries over the global economy returned to the fore centring on Citigroup's ability to survive, but hopes Opec might cut output again as early as this week helped buoy prices.
US light crude for January delivery rose 67 cents to $50.60 by 0238 GMT, after rising as much as $1.41 soon after the start of electronic trading. The contract settled 51 cents higher at $49.93 a barrel on Friday, after dipping to a 3-1/2 year low of $48.25.
London Brent crude rose 79 cents to $49.98. "As we get closer to the Opec meeting, there are going to be strong expectations of an output cut, especially given the falls we've had since the last meeting," said Toby Hassal, chief analyst at Commodity Warrants Australia in Sydney. Oil prices will also be influenced by Asian stocks and movements in the US dollar, he said.
Asian stock markets were little changed on Monday, uninspired by Wall Street's late rally on Friday, which was boosted by reports that New York Federal Reserve President Timothy Geithner will be nominated as President-elect Barack Obama's Treasury Secretary, news which was confirmed at the weekend.
On Monday, the dollar fell 0.8 percent from US trade on Friday to 95.18 yen, with the yen rising as market awaited any confirmation of reports that Citigroup had cut a deal with the government to hold some of its troubled assets. Analysts said the market will focus on Obama's announcement of his economic team later in the day, as he worked on a stimulus plan designed to lift the country out of its worst financial crisis in decades.
Oil has plummeted nearly $100 a barrel since its record high of over $147 in mid-July, with high prices earlier this year and the recent credit crisis denting demand in large consumer nations. Venezuelan oil minister Rafael Ramirez urged Opec on Sunday to agree to cut supply by 1 million barrels per day (bpd) at an emergency meeting in Cairo November 29 and make the cut take effect before the end of the year.
The cut would be aimed at shoring up prices by creating a better balance between supply and demand on oil markets, but Opec President Chakib Khelil had said last week the cartel might not take any decision to cut output until its December meeting. Opec agreed in October to cut output by 1.5 million barrels per day from November 1 but the move has failed to stem the decline in oil prices.