Oil up sharply near $50 as OPEC readies output cut

Oil prices rose sharply toward $50 a barrel Monday as investors anticipated OPEC will announce a large production cut at its meeting this week.

Light, sweet crude for January delivery was up $3.24 to $49.52 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. The contract briefly reached $50.05 before falling back. On Friday, it fell $1.70 to settle at $46.28.

In London, January Brent crude gained $3.40 to $49.81 on the ICE Futures exchange.

The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, has signaled it plans to announce a substantial reduction of output quotas at its meeting Wednesday in Algeria.

"The extent of such cuts is still unclear and this uncertainty has been a source of continuing volatility in futures markets," said a report by analysts at KBC Market Services in Great Britain.

Kuwaiti oil minister Mohammed al-Eleim said Monday that OPEC was "undoubtedly inclined" to cut production. But he added that any decision would balance the need for a cut with its impact on the ailing world economy and producer nations' need for revenue to fund development projects.

Iranian Oil Minister Gholam Hossein Nozari was quoted Sunday on his ministry's Web site saying that Iran would push for a production cut of 1.5 to 2 million barrels per day.