Oil prices rose more than 4 percent to a three-week high on Monday, bolstered by growing conviction that major oil producing countries would agree to limit output at a meeting next week.
Brent crude oil briefly touched $49 a barrel. The London benchmark has risen 11 percent in a week since Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, started a diplomatic charm offensive to persuade the group's more reluctant members to join its proposed output plan.
In recent days, several OPEC members including Iran, along with non-member Russia, have suggested they were leaning toward a deal to limit output.
"When you've got all of the major players on board with a production cut, obviously you're very close to getting a deal done," said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
"You never know with OPEC — sometimes they go to the last minute and there are a lot of false starts."
Brent crude oil futures were up $2.12, or 4.5 percent, at $48.98 a barrel by 2:28 p.m. ET (1928 GMT), having touched their highest level since Nov. 2, while U.S. West Texas Intermediate (WTI) crude were up $1.73, or 3.7 percent, at $47.42 a barrel.
The dollar eased off last week's 13½-year highs as Treasury yields nudged lower, bolstering oil and the broader commodities complex including copper and gold.
Goldman Sachs analysts said in a note that chances of an OPEC cut succeeding have increased, and they believe the global oil surplus will shift into a deficit by the middle of next year, which would support prices.
"Our base case now is that an OPEC production cut will be announced and implemented," they wrote. In late September, the brokerage said conditions were not optimal for a cut to work.
Russian Vladimir Putin said he saw no obstacle to non-OPEC member Russia agreeing to freeze oil output, which at more than 11 million barrels per day is at a post-Soviet high.
Meanwhile, OPEC members last week proposed a deal for Iran to cap, rather than cut, output.
Iran has been one of the main hurdles facing any output curtailment by OPEC, as Tehran wants exemptions to try to recapture market share lost under years of Western sanctions.
Libya and Nigeria, whose exports have been hampered by violence, have also asked to be left out of any deal. A recovery in production from both countries means the onus to cut rests on Saudi Arabia and its Gulf neighbors.
"While loose terms may be agreed, I remain skeptical that a full detailed agreement can be both achieved and carried out by OPEC given the clear differences that are so evident between certain key members," OANDA markets strategist Craig Erlam said.
Barclays analysts said some form of deal was likely, but warned an agreement could have little impact.
"We expect OPEC to agree to a face-saving statement ... (but) U.S. tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut," the bank said.
Hedge funds raised their net holdings of U.S. crude futures and options for the first time in three weeks in the week to Nov. 15, having delivered one of the largest cuts on record the previous week. The move highlights the nervousness among investors about betting heavily on oil in either direction.