Oil edged higher on Tuesday, supported by the possibility that OPEC would agree a supply cut at its meeting in Nigeria on Thursday, Reuters reported.
U.S. crude prices traded 16 cents higher at $61.37 a barrel at 0855 GMT after losing 81 cents on Monday. London Brent crude gained 18 cents to $62.02 a barrel.
Ministers from the Organization of Petroleum Exporting Countries have sent mixed signals ahead of the meeting.
A narrow majority of OPEC members have said they are leaning toward a cut of at least 500,000 barrels per day (bpd) to counter rising fuel stocks in the world's top consumer the United States. Crude inventories there have reached their highest level for this time of year since 1993.
But with oil above $60, some ministers are reluctant to take any action that could drive prices higher and accelerate economic slowdown in the United States.
"Sixty is acceptable. I imagine most OPEC states are comfortable with these prices but we are concerned from any impact from stockpiles," Kuwait oil minister Sheikh Ali al-Jarrah al-Sabah told reporters before heading for Nigeria.
But price hawk Iran said on Tuesday most OPEC members are in favor of a cut to combat excess supplies.
"Considering the considerable supply surplus over demand, we are trying to cut production," oil minister Kazem Vaziri-Hamaneh was quoted as saying by Iran's Oil Ministry's news Web site.
OPEC, which pumps more than a third of the world's oil, has implemented about 730,000 bpd of a promised 1.2 million bpd cutback from November, according to a Reuters survey.
U.S. INVENTORIES
Mild weather in the United States was reducing the need for home heating and keeping fuel inventories high.
U.S. heating demand is expected to be nearly 27 percent below normal this week, with warmer temperatures in most regions in the country's east, the National Weather Service said on Monday.
Distillate stocks, which include heating oil, were expected to rise 400,000 barrels when the U.S. government releases its next inventory snapshot on Wednesday.
Analysts in a Reuters poll expected crude stocks to have fallen by 700,000 barrels last week as refineries crank up output ahead of the peak winter demand period.
Analysts point to the weakening dollar, which reduces OPEC's purchasing power from dollar-denominated oil, as another reason that could push OPEC to take further action to stem a 22 percent oil price slide since a record over $78 in July.
The dollar fell against the euro on Tuesday, extending losses made after former Federal Reserve Chairman Alan Greenspan warned investors to expect a few more years of dollar weakness.
"The weaker dollar will also encourage the cartel's hawks to push for additional cuts this week in Nigeria," said JP Morgan.
OPEC linchpin Saudi Arabia has already told oil refiners in Asia that it will reduce their supplies next month to 8 percent below contracted volumes. About half of the kingdom's 7 million bpd of crude exports move to Asia.