Oil prices edged higher on Monday, after falling as much as 2 per cent in early trading, as the market grappled over the shaky prospect of major producers being able to agree output cuts at a meeting on Wednesday aimed at reining in global oversupply.
Brent crude futures fell as far as 2 per cent before clawing back to trade up 29 cents at $47.44 per barrel at 1008 GMT.
US West Texas Intermediate (WTI) crude futures also recouped early losses and were trading up 15 cents at $46.21 per barrel.
The choppy trading came after prices tumbled more than 3 per cent on Friday as doubts grew over whether the Organisation of the Petroleum Exporting Countries (OPEC) would reach agreement to help curb global supply overhang that has more than halved prices since 2014.
On Sunday, Saudi Arabian Energy Minister Khalid al-Falih said that he believed the oil market would balance itself in 2017 even if producers did not intervene and that keeping output at current levels could therefore be justified.
Analysts said that even if some form of an output restriction is announced after producers meet in Vienna on Wednesday, the details matter greatly.
"Do not take an announcement of a headline cut of 1 million barrels per day (bpd) at face value. It could still imply an OPEC production level considerably in excess of 33 million bpd, depending on developments in Libya and Nigeria and the speed and rigour of compliance," David Hufton, managing director of brokerage PVM Oil Associates Ltd. said in a note.
He added that the stakes of failure are high for producer nations dependent on oil export revenue.
"But one thing few, if any, analysts will disagree with is that if OPEC do not come up with a credible agreement to cut production on Wednesday oil prices will end the year below $40 bbl and be chasing down $30 bbl early next year," Hufton said.
A meeting scheduled for Monday between OPEC and non-OPEC producers was called off after Saudi Arabia declined to attend, while concerns over the feasibility of a deal pushed the crude oil volatility index close to a nine-month high.
Even if a cut is agreed, oversupply may not end soon.
The US oil rig count rose by three last week, and Goldman Sachs said that "since its trough on May 27, 2016, producers have added 158 oil rigs (+50 percent) in the US."
(Additional reporting by Henning Gloystein in Singapore and Yuka Obayashi in Tokyo; editing by Jason Neely)