Oil pared losses today after an earlier fall to a new three-and-a-half year low below $48 a barrel, weighed down by heavy losses in global stock markets after confirmation that the US was in recession.
But a rally in European shares and expectations of a bounce on Wall Street helped oil move up from its lows.
US light crude for January delivery was up 3 cents at $49.25 a barrel by 1pm. It earlier touched $47.36, its lowest since May 2005. Prices had dropped nearly 10% yesterday.
London Brent crude was up 5 cents at $48.02 a barrel after touching a low of $46.02, its lowest since February 2005.
Oil prices had tumbled yesterday after OPEC decided to wait until later this month to take more supply off the market to try to defend prices.
A key economic research body found on Monday that the US economy had slipped into recession in December 2007.
OPEC is ready to cut production by a significant amount when it meets later this month in Algeria to try to shrink rapidly building stocks, OPEC's secretary-general said on Monday.
Top exporter Saudi Arabia has highlighted $75 a barrel as a 'fair price' for oil.
But OPEC's existing cutbacks of about two million barrels per day have so far failed to bolster the price, which has dropped nearly $100 a barrel from a peak of more than $147 in July.
More negative news could be in store tomorrow, with US crude oil inventories likely to have risen by 1.8 million barrels last week, a third consecutive weekly build, as imports continued to increase, a preliminary Reuters poll of analysts showed.
