Oil prices pared gains after surging as much as 2 percent on Monday as Venezuela hinted that OPEC and other major oil producers could agree to a market support deal and clashes in Libya disrupted attempts to boost crude exports.
Oil was also supported by higher equity prices on Wall Street and a weaker dollar that made greenback-denominated commodities, such as crude, more affordable to holders of the euro and other currencies.
Last week, Brent hit a two-week low and WTI fell to a five-week low on concerns about oversupply with more deliveries from Libya and Nigeria.
Clashes in Libya on Sunday, however, halted the loading of the first oil cargo from the port of Ras Lanuf as the state-run National Oil Corporation prepared to restart exports from the ports blockaded for several years.
Oil prices also rose after Venezuelan President Nicolas Maduro said on Sunday that the Organization of the Petroleum Exporting Countries and other major oil producers were close to reaching a deal on price stability that could announced later this month.
OPEC and non-OPEC members are to meet on the sidelines of an industry conference in Algeria next week for talks on the potentially freezing oil production.
OPEC members may call an extraordinary meeting to discuss oil prices if they reach consensus, OPEC Secretary-General Mohammed Barkindo said on Sunday. OPEC's all-important policy meeting is due in November. He has previously said discussions in Algiers will be consultations and no major decisions will be made during talks with OPEC and non-OPEC producers.
In the past, analysts have persistently discounted the possibility that OPEC members such as Saudi Arabia, Iran, Nigeria and Libya will agree to production curbs as they ramped up output to protect market share. But with the Algiers talks approaching, some opinions were shifting.
Speculators' net long positions in Brent have stabilized at around levels seen in mid-August as hedge funds bet on the possibility of an oil output deal, data from last week showed.
"My bias remains positive as there appears to be more bullish surprises as of late in a time where the market was pretty convinced that it was going to be the opposite," said Scott Shelton, broker for crude and other energy products at ICAP in Durham, North Carolina.
But John Kilduff, founding partner at Again Capital, said the Venezuelans, desperate for higher prices amid a national economic crisis, are jawboning the market at every opportunity.
"The problem they have is the reality that this production from all of them just keeps going up and we're about to see a big jump in production once the Libyan situation resolves," he told CNBC's "Squawk Box" on Monday.
"The Nigerians are coming back online. And the Russians of all people are going to bring 200,000 barrels more to the market by the end of the year from a big field they've got going in the Caspian, so it's just a joke."
Iran's President Hassan Rouhani said Tehran supports any move to stabilize the global oil market and lift prices, the Iranian oil ministry news agency SHANA quoted him as saying on Sunday.
Iran, OPEC's third-largest producer, has been boosting its oil output after the lifting of Western sanctions in January. Tehran refused to join a previous attempt this year by OPEC and non-members such as Russia to stabilize production, and talks collapsed in April.
Concerns about rising supplies remain a bugbear. A preliminary Angolan November loading plan showed supplies were set to bounce back from a 10-year low.
Crude exports from OPEC's third biggest producer Iran jumped 15 percent in August from a month ago to more than 2 million barrels per day, according to a source with knowledge of its tanker loading schedule, closing in on shipment levels seen five years ago before Western sanctions.
In the United States, drillers have added oil rigs for 11 out of the past 12 weeks. Drillers added two oil rigs in the week to Sept. 16, bringing the total rig count up to 416, the most since February.
— CNBC's Tom DiChristopher contributed to this story.