LONDON (Reuters) - Oil reversed early losses to trade back above $58 a barrel on Monday, as concerns over the strength of demand were offset by increasing evidence of OPEC output cuts and the hijacking of a Saudi Arabian supertanker.
U.S. light crude for December rose 2 percent, or $1.24 a barrel to trade at $58.28 by 10:43 a.m. EST. Earlier in the session prices had fallen as low as $55.29l.
Last Thursday, U.S. crude reached a low of $54.67, its weakest since January 2007.
London Brent crude rose $1.34 to $55.58 a barrel.
Prices had eased earlier on Monday after a meeting of the Group of 20 major economies ended with few concrete proposals on dealing with a global recession.
But news that a fully laden Saudi-owned crude oil tanker has been hijacked by Somalian pirates off the east coast of Africa saw prices reverse higher.
Reports that seaborne exports from the Organization of the Petroleum Exporting Countries (OPEC) fell by 516,000 barrels per day (bpd) in the four weeks to November 2 was also boosting buying, despite signs that the producer group is unlikely to cut output again until its meeting on December 17.
"There's some uncertainty in the market following the Saudi hijacking which is supporting prices," said Sucden trader Robert Montefusco. "We're also going to see some volatility ahead of the options expiry on U.S. crude contracts later on Monday."
The expiry of December U.S. crude options -- the right to buy or sell oil contracts at certain predetermined dates and prices -- was seen as likely to influence short-term moves on Monday.
Analysts said there would be a record delivery of "put" options by traders who have the right to sell oil at prices well above current levels, following oil's rapid collapse from above $145 a barrel back in July.
Olivier Jakob at Petromatrix said that the expiry of December options should see some traders attempting to protect certain price levels, with much of the focus around $55-$60 a barrel level.
However, analysts said that longer-term concerns over the worst financial crisis since the 1930s was likely to keep oil prices under pressure.
The global slowdown has crushed demand growth estimates for oil next year. OPEC slashed its forecast for demand for its oil in 2009 by 220,000 bpd to 30.92 million bpd on Monday.
However, the group's president Chakib Khelil said he saw a meeting of OPEC ministers in Cairo on November 29 as a brainstorming session, rather than a production meeting.
Several OPEC members want further production cuts to try and boost prices, with Iran looking for a 1-1.5 million bpd restriction on member output.
(Additional reporting by Christopher Johnson in London and Fayen Wong in Perth; editing by William Hardy)
