Hopes for an agreement between Russia, Saudi Arabia and other crude giants to at least freeze output sent both main contracts racing above $40 earlier this month, helped by a dive in the strength of the dollar.
However, some of those gains were chipped away last week as talk of a possible US interest rate rate lifted the dollar — making oil more expensive — and a report showed another jump in US crude stockpiles.
US benchmark West Texas Intermediate was up 50 cents, or 1.27 percent, to $39.96. Brent was up 45 cents, or 1.11 percent, at $40.89.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and key non-members led by Russia are due to discuss a proposed output freeze at a meeting in Doha on April 17.
Bernard Aw at IG Markets told AFP a dip in the number of US oil rigs in operation provided some buying incentives, although business had been slim due to the long Easter break across most world markets.
However, he warned that “the fundamental picture of oil is still a little bit bearish” owing to a global supply glut and a slowdown in the global economy, particularly China.
“Everything hinges on the meeting between OPEC and non-OPEC producers,” Aw said. “If it takes place and they come to some agreement of a production freeze, we could see some gains well beyond $40.”
Qatar’s energy minister Mohammed al-Sada, who also serves as OPEC president, earlier said the initiative was backed by 15 countries accounting for 73 percent of worldwide output.
Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services firm EY, said traders would also be looking at upcoming US and Chinese economic data for direction.