Oil prices jump 3 percent on hopes of OPEC output cut

Oil prices jumped more than 3 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.

North Sea Brent crude oil was up $1.26 a barrel, or 2.8 percent, at $45.69 by 8:58 a.m. ET (1358 GMT) after hitting a three-month low of $43.57 on Monday.

U.S. light crude was up $1.26 a barrel, or 2.9 percent, at $44.58. It reached a three-month low of $42.20 on Monday.

Oil producers in the Organization of the Petroleum Exporting Countries are due to meet later this month to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say.

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.”

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.