The Organization of the Petroleum Exporting Countries is ready to cut production by a significant amount when it meets later this month.
Oil fell below $49 a barrel on Tuesday, after reversing early losses in response to a rally in U.S. and European shares.
It had earlier fallen to a new 3-1/2-year low below $48, weighed down by gloom over the ailing world economy and its impact on fuel demand.
U.S. light crude for January delivery was down 54 cents at $48.74 a barrel by 11:06 a.m. EST. It earlier touched a new 3-1/2 year low of $47.36, its lowest since May 2005.
Prices had dropped nearly 10 percent on Monday.
London Brent crude was down 69 cents at $47.28 a barrel after touching a low of $46.02, its lowest since February 2005.
OPEC has already cut supply by about 2 million barrels per day, but this has so far failed to bolster prices, which have fallen nearly $100 a barrel from a peak of more than $147 in July.
Top exporter Saudi Arabia has highlighted $75 a barrel as a "fair price" for oil.