Oil rose more than $3 on Monday after renewed buying on speculation OPEC may cut output again at its Sunday meeting as the United States market came into play.
U.S. stocks pared early losses and the Nasdaq turned positive on Monday as shares of big-cap tech companies rebounded following Friday's sell-off.
OPEC Secretary-General Abdullah al-Badri said the 12-member producer group would consider reducing output again at the meeting as it tries to counter downward pressure on oil prices from falling demand.
All options are on the table, he told reporters in Qatar when asked if OPEC, which pumps more than a third of the world's oil, would announce another reduction in supply at its meeting in Vienna.
The severe downturn in the global economy over the last year has reduced world energy consumption sharply and oil prices have tumbled from a peak of almost $150 a barrel in July.
French oil major Total will reduce runs at its refineries operating in France by about 20 percent due to poor margins as demand for fuel falls, trade sources said on Monday.
Speculation grew over OPEC's next move.
Some in the market expected a cut of around 1 million barrels per day (bpd) but others said that would be difficult and painful to implement.
I think they will seek better compliance with existing quotas, said Christopher Bellew, oil broker at Bache Commodities in London. My feeling is that OPEC is able to prevent further price weakness but until the over-hang of oil stocks begins to be eroded, they will struggle to raise prices.
OPEC has already promised to cut oil production by a total of 4.2 million bpd from the production levels seen in September and a Reuters survey suggested the group has come close to meeting that pledge with compliance of more than 80 percent.
Badri also said OPEC will slash its 2009 oil demand forecast by 1 million bpd because of the global economic slowdown. He said that although the oil price was not really acceptable to the producer group, it was not as bad as it could be, given the state of the world economy.
(Reporting by Chris Baldwin, Christopher Johnson & Joe Brock; editing by William Hardy)