NEW YORK (Reuters) - Oil prices gained more than 2 percent on Monday in volatile trading after falling as much as 2 percent, recouping losses as the market reacted to the shaky prospect of major producers being able to agree output cuts at a meeting on Wednesday.
U.S. West Texas Intermediate crude futures CLc1 settled up $1.02, or 2.21 percent at $47.08 a barrel. Brent crude LCOc1 rose $1.00, or 2.12 percent, to $48.24 a barrel.
In post-settlement trading, oil futures pared gains after Reuters reported that OPEC experts did not agree on the details of a deal to cut output.
Trading was choppy after prices tumbled more than 3 percent on Friday as doubts grew over whether the Organization of the Petroleum Exporting Countries would reach agreement to help curb a global supply overhang that has more than halved prices since 2014.
"Through Wednesday, trade will be very headline-driven," said Tony Headrick of CHS Hedging. "Comments coming out of pre-meetings, particularly from Iraq this morning, are really a driver today."
Market watchers expected prices to remain volatile until OPEC's Wednesday meeting offers the market a definitive answer as to whether OPEC and non-OPEC producers can agree on cuts.
"You're going to see a flattening out of positions closer to Wednesday," said Gene McGillian at Tradition Energy in Stamford, Connecticut. Traders with long positions in the market may be reluctant to sell for fear of missing out on an upside if there is a production cut that triggers a rally.
After a cut is announced, sellers could emerge as oil rallies toward $52 a barrel, he said. "You don't fade at 47 or 45, because you're risking a loss on momentum if they do have an agreement."
On Sunday, Saudi Arabian Energy Minister Khalid al-Falih said the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.
The statement stoked simmering disagreement between OPEC and non-OPEC crude exporters such as Russia over who should cut production by how much.
By Monday, OPEC was scrambling to rescue the deal, with analysts warning of a sharp price correction if they fail. Prices spiked as Iraq's oil minister said the country would cooperate with the group to reach an agreement "acceptable to all".
A meeting scheduled for Monday between OPEC and non-OPEC producers was called off after Saudi Arabia declined to attend, while concerns over the feasibility of a deal pushed the crude oil volatility index .OVX close to a nine-month high.
Others warned that even if some form of output restriction is announced after producers meet in Vienna on Wednesday, the details matter greatly.
"Do not take an announcement of a headline cut of 1 million barrels per day (bpd) at face value. It could still imply an OPEC production level considerably in excess of 33 million bpd, depending on developments in Libya and Nigeria and the speed and rigour of compliance," David Hufton, managing director of brokerage PVM Oil Associates Ltd said in a note.
Even if a cut is agreed, oversupply may not end soon.
The U.S. oil rig count rose by three last week, and Goldman Sachs said that "since its trough on May 27, 2016, producers have added 158 oil rigs (+50 percent) in the U.S.".
Additional reporting by Libby George in London, Henning Gloystein in Singapore and Yuka Obayashi in Tokyo; Editing by Marguerita Choy and Chizu Nomiyama