TOKYO (Reuters) - Oil bounced back $1 to trade above $47 a barrel on Monday on signs that OPEC members are set to make a deep supply cut when the oil cartel meets later this week, in an effort to prop up prices.
Rising equities and a weaker dollar also lent support to oil, which has lost $100 since its record high of over $147 in mid-July on growing fears of slowing world appetite for energy amid a mounting global financial crisis.
U.S. light crude for January delivery rose $1.04 to $47.32 a barrel by 0207 GMT, having risen earlier to $47.41. The contract closed $1.70 lower on Friday after the U.S. Senate failed to pass a bailout for automakers and Goldman Sachs predicted oil could fall to $30.
London Brent crude gained 69 cents to $47.10.
"OPEC's bullish comments on supply cuts, such as 2 million barrels per day, is supporting the price," said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo.
"It's also getting support from the dollar's weakness against the euro and the yen at the start of the week."
Equity markets in Asia opened higher on Monday, with Japan's benchmark Nikkei 225 Index .N225 up 4.24 percent on hopes of a lifeline for the struggling U.S. auto industry.
OPEC ministers are in agreement on the need to cut output when they meet on Wednesday in Algeria to prop up sagging prices, OPEC President Chakib Khelil said on Saturday, but declined to say by how much the organization would cut.
Iran will propose that OPEC cuts its oil output by between 1.5 and 2 million bpd, Iran's oil minister was quoted as saying on Sunday. [ID:nL0387164]
In two meetings since early September, the Organization of the Petroleum Exporting Countries (OPEC) has agreed to reduce supply by a total of two million barrels per day (bpd) but prices have continued falling.
"With global oil demand expected to continue falling through much of 2009, the pressure is on the cartel as well as non-OPEC producers such as Russia to remove excess production from the market," said Jonathan Kornafel, Asia director of Hudson Capital Energy in a note.
U.S. Department of Transportation figures showed on Friday U.S. motorists drove 9 billion fewer miles in October than a year earlier, down 3.5 percent. [ID:nWAT010658]
Equity markets opened higher in Asia on Monday after the Bush administration said it could be willing to provide emergency aid to the teetering US auto industry, keeping open the prospects for a bailout the day after Congress failed to approve a deal.
The euro rose to a two-month high against the dollar on Monday, in the wake of recent comments by European Central Bank policymakers that have cast some doubt on how soon the ECB nay lower interest rates again.
(Additional reporting by Maryelle Demongeot in Singapore; Editing by Sambit Mohanty)
