Oil prices were up sharply near $49 a barrel Monday as investors anticipated OPEC will announce a large production cut at its meeting this week.

By midday in Europe, light, sweet crude for January delivery was up $2.47 to $48.75 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell $1.70 to settle at $46.28.

In London, January Brent crude rose $2.06 to $48.47 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.

On Monday, the Nymex contract was trading in a relatively wide range between $45.92 and $49.00.

Olivier Jakob of Petromatrix in Switzerland noted that trading volumes last week showed a "sharp rebound" for Nymex crude, "close to double the volume seen in the two previous weeks" and near the highest levels seen this year, above 700,000 contracts a day.

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.

Analysts have questioned whether OPEC members will follow through with any announced cut.

"They're talking about a severe cut, but the question is their discipline," said Christoffer Moltke-Leth, head of sales trading at investment firm Saxo Capital Markets in Singapore. "Unless they really surprise the market, this cut may not support the price much."

Oil has jumped from a four-year low earlier this month of $40.50 a barrel on expectations that an OPEC output reduction could be the catalyst to stabilize the oil price, which has fallen 65 percent since July.

"For the first time in several weeks, there are signs that crude prices might have bottomed out and could be heading upward again," KBC Market Services said.

Investors largely ignored OPEC's 1.5 million barrels a day output cut in October, focusing instead on a slowing global economy that's hurt crude demand.

More bad macro-economic and company news from the U.S. and Europe over the coming weeks will likely push oil prices lower, Moltke-Leth said.

"I expect crude to continue its slide and I don't think OPEC is going to prevent that," Moltke-Leth said. "Demand destruction in the major economies will still very much be on the agenda. We could go as low as $30 a barrel."

Petromatrix's Jakob said that while no new data was expected this week to show a global rise in appetite for crude, the impact of the OPEC meeting on the supply side likely would be considerable.

"There is no data available to point to an improving demand, but this week will be focused on the supply side and the global supply and demand for the first half of 2009 will need to be rewritten on Thursday after the OPEC decision," Jakob said.

In other Nymex trading, gasoline futures rose 5.40 cents to $1.1317. Heating oil gained 7.48 cents to $1.5682 a gallon while natural gas for January delivery jumped 9.7 cents to 5.585 per 1,000 cubic feet.