Oil rose more than 1 per cent and topped $46 a barrel today, extending the previous session's gains, as investors bank on expectations that Opec will cut output again at this month's meeting.
But nagging worries about the health of the global economy and its impact on world energy consumption caused oil prices to pare some of their early gains of more than 2 percent.
US crude for April delivery rose 77 cents to $46.29 a barrel by 0746 GMT, after rising as much as $1.24.
London Brent crude rose 40 cents to $45.25 a barrel. It was the first time since December 11th that NYMEX crude had gained a premium over Brent at the settlement.
Opec will slash its 2009 oil demand forecast by 1 million barrels per day (bpd) because of the global economic slowdown, the organisation's secretary general Abdullah al-Badri said toay, adding that although the current oil price was not really acceptable to the producer group, it was not as bad as it could be, given the state of the global economy.
Mr Al-Badri had also said on Friday that low oil prices could provide economic stimulus in the short term, but at the cost of a supply shortfall in future due to low investment.
The group has already agreed to cut production by 4.2 million barrels per day since September.
In a sign that oil investors were expecting Opec to further cut output at this month's meeting, there were fewer open interest positions at the $25, $30 and $35 put options on the NYMEX April crude oil contract versus the previous week.
Open interest positions remained bulked at the $50 and $55 call options, with more at $55 than the previous week.
Reuters