US crude settles up 5.8% at $45.81 for biggest gain in seven months

Oil prices jumped nearly 6 percent on Tuesday, bouncing back from multi-month lows on expectations that OPEC will agree later this month to cut production to reduce a supply glut.

Saudi Energy Minister Khalid al-Falih is expected to travel to the Qatari capital, Doha, this week for meetings with oil-producing countries on the sidelines of an energy forum, sources familiar with the matter told Reuters.

The Organization of the Petroleum Exporting Countries is due to meet on Nov. 30 to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.

Traders and analysts also pointed to a report from Monday about a last ditch effort by OPEC to bring the world's top producers together to rein in production, saying it triggered a wave of short covering.

North Sea Brent crude oil was up $2.50 a barrel, or 5.6 percent, at $46.93 by 2:38 p.m. ET after hitting a three-month low of $43.57 on Monday.

U.S. light crude settled up $2.49 a barrel, or 5.8 percent, at $45.81. It reached a three-month low of $42.20 on Monday.

"Clearly the market is now seeing increased chances of an OPEC production cut," Commerzbank analysts said in a note.

"There is doubtless considerable pressure to take action, as the oversupply will not reduce itself"

OPEC is a diverse grouping, politically and economically, and several members wish to increase production.

Saudi Arabia's energy minister has said it is imperative OPEC reach a consensus on a deal to curb production, Algeria's state news agency APS said on Sunday.

"Reports of a diplomatic push by OPEC to strike a deal are supporting the markets," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. "The rally could last a little while but the underlying fundamental picture is still bearish."

Venezuelan President Nicolas Maduro said on Tuesday he will meet with OPEC secretary-general Mohammed Barkindo in Caracas to discuss a potential agreement to limit global oil production.

IG Group market strategist Jingyi Pan said market sentiment has been buoyed by reports that key producers including Iran and Iraq were thinking about restraining production.

News of an attack on a major oil pipeline in Nigeria, the Nembe Creek Trunk Line in the southern Niger Delta, gave an additional push to prices.

A weaker dollar also boosted greenback-denominated crude oil.

However, the underlying fundamentals were still bearish, traders said, pointing to rising U.S. shale production.

U.S. producers had rushed to lock in future output as prices breached the key psychological level of $50 barrel, keeping the threat of continued drilling high, even in a low-price environment.

Technical analysts said oil markets were due an upward correction after a month of declines.

"The current active contract (for U.S. crude) is expiring. The last trading day is next Monday, so some oil traders are already starting to close out their positions to roll over," Philips Futures investment analyst Jonathan Chan in Singapore said.

But rising Libyan oil production could cap gains.

A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday.

Libya's oil production has almost doubled to around 600,000 bpd in recent weeks.