Oil prices rebounded Tuesday on fresh hopes an OPEC-led meeting this week will reach an agreement to reduce oversupply and shore up the market.

Prices have fallen sharply since expectations for a quick deal to cut output levels were dashed, but the rescheduling to Thursday of a meeting of major crude producers boosted sentiment.

US benchmark West Texas Intermediate was up 3.83 percent to $27.08 a barrel in Asian morning trade.

A barrel of Brent crude, the international benchmark, was trading 2.81 percent higher at $33.98.

Prices fell to 18-year lows last week as the market wallowed in oversupply arising from a price war between Saudi Arabia and Russia, which have ramped up production.

Oil prices have fallen sharply since expectations for a quick deal to cut output levels were dashed
Oil prices have fallen sharply since expectations for a quick deal to cut output levels were dashed AFP / HAIDAR MOHAMMED ALI

"Prices recovered some of the early losses, as both Russia and Saudi Arabia suggested they would be willing to cut production but only if the rest of the world followed suit," ANZ Bank said in a note.

"The stumbling block appears to be the US, which is reluctant to join an agreement."

But with US Energy Secretary Dan Brouillette holding talks with Saudi Arabia and Russia, "the market is hopeful of some sort of agreement", the bank added.

OPEC is the Organization of the Petroleum Exporting Countries of which Saudi Arabia is the biggest producer, while Russia is not an OPEC member.

"Ultimately there is hope that cooler heads will prevail, and producers will reconcile and formulate a response that puts a floor under oil prices," said AxiCorp global market strategist Stephen Innes.

"Still, the challenge remains to the extent which producers are willing to cut."

Russia Energy OPEC