PERTH (Reuters) - Oil edged up to near $75 a barrel on Tuesday, rising for the third consecutive session, on expectations that OPEC will cut output this week to lift prices that have shed half their value in three months.
In addition, forecasts of colder weather in the U.S. Northeast also supported values.
Signs that the global credit crunch might be easing and comments by U.S. Federal Reserve Chairman Ben Bernanke urging more government spending prompted renewed hopes that the worst of the financial crisis may be over, lending support to oil prices.
U.S. light crude for November delivery rose 25 cents to $74.50 a barrel by 0547 GMT, after earlier gaining as much as $1.17. Prices jumped by $2.40 on Monday.
The market hit a record high of above $147 in mid-July.
London Brent crude shed 3 cents to $72.00 a barrel after rising as much as $1.18 earlier.
"All eyes are certainly on the OPEC team and that is the key short-term driver supporting oil prices," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"The global equities markets have also performed better on increased confidence that the credit freeze is beginning to ease and these are early indications that the macroeconomic outlook may be better than expected."
Asian stocks opened higher on Tuesday, tracking sharp rallies in U.S. markets, with Japan's benchmark Nikkei average up 2.6 percent and Australia's S&P/ASX 200 index rising 2.7 percent.
EYES ON OPEC CUT
Still, expectations that the Organization of the Petroleum Exporting Countries may only make modest output cuts this week were limiting oil's gains.
An OPEC source told the Saudi-owned al-Hayat newspaper that the cartel might not need a hefty oil output cut when it meets on Friday, as others in OPEC talked of a possible cut of more than a million barrels per day (bpd), perhaps in stages.
While OPEC ministers were expected to cut output at the emergency meeting in Vienna, a debate on how much oil they should take off global markets could be intense as they balance their price needs against risks to a fragile world economy.
The International Energy Agency, which advises industrialized countries, said an OPEC output cut could prolong a global economic slowdown. [ID:nLK316554]
Analysts said support for prices also came on forecasts for colder weather in the U.S. Northeast, the top heating oil market.
"Oil demand will still pick up even if the U.S. was in the midst of a recession," Purvin & Gertz's Shum said.
U.S. crude oil inventories probably rose 2.3 million barrels last week, a preliminary Reuters poll ahead of the U.S. government oil data due on Wednesday showed.
The poll also showed forecasts for a 100,000-barrel build in distillate inventories, which include heating oil and diesel, and a 2.1 million barrel gain in gasoline supplies.
