Oil held above $47 a barrel on Friday ahead of OPEC's Sunday meeting in Vienna, after two volatile days of trade this week.
The producer group gathers in the Austrian capital this weekend to discuss its output policy and perhaps adjust the 4.2 million barrels per day cut it implemented last September in reaction to the depth and speed of the global financial crisis.
OPEC has done everything they can to set the market up for some kind of cut to try and push the price a bit higher, said Simon Wardell, director of global oil analysis and forecasting at IHS Global Insight.
But it might be that what we get in Vienna is talk of implementing full compliance of previous cuts before we get to the next one, to try and give the hard pressed economy of the world a respite, he said
Oil has hovered between $33 and $50 since the beginning of the year after OPEC implemented and began showing compliance to output cuts put in place to arrest its slide off last July's peak above $147 a barrel.
U.S. light crude for April delivery rose 32 cents to $47.35 a barrel by 1400 GMT (10 a.m. EDT), having jumped $4.70 Thursday to settle at $47.03 and erasing the previous two sessions' losses.
London Brent crude rose 47 cents at $45.56.
Ahead of its meeting Sunday, OPEC released a report in Friday showing world oil demand is contracting faster than expected and increasing pressure on prices.
The Organization of the Petroleum Exporting Countries said global demand would fall by 1.01 million bpd on 2009, revising its earlier forecast of a fall by 580,000 bpd.
With continued economic deterioration and demand erosion as well as the impending low demand season, there is likelihood of renewed pressure on prices, the report said.
Earlier Friday, the International Energy Agency, which advises 28 industrialized nations on energy policy, said strict adherence to OPEC's September cuts would shrink oil stocks in developed nations, even as it projects further demand contraction, implying OPEC would not lower output curbs on Sunday.
Our view it that they don't really need to do very much more in terms of new targets, said head of the oil industry and markets division David Fyfe of the Paris-based IEA.
OPEC seaborne oil exports, excluding Angola and Ecuador, will fall to a five-year low in the four weeks to March 28, to 22.76 bpd, down 350,000 bpd, UK consultancy Oil Movements said in its latest weekly estimate Thursday..
(Additional reporting by Maryelle Demongeot in Singapore and Alex Lawler and Barbara Lewis in Vienna; editing by James Jukwey)