Oil prices neared $87 a barrel Friday ahead of this weekend summit where European leaders will try to agree on a plan to contain their region's debt crisis.
By early afternoon in Europe, benchmark crude for December delivery was up 90 cents at $86.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 22 cents to settle at $86.07 in New York on Thursday.
In London, Brent crude was up 82 cents at $110.58 a barrel on the ICE Futures exchange.
Europe's leaders plan to meet Sunday and have scheduled another meeting for next week as differences emerged this week between Germany and France over how to protect European banks from the consequences of a possible default by the Greek government.
Crude has traded between $85 and $89 most of this week as traders await details of Europe's debt plan.
"Each time an announced meeting does not come up with a resolution the market rallies because the next meeting will surely bring a resolution," said Olivier Jakob of Petromatrix in Switzerland. "On Sunday, we are likely to receive a strong commitment from France and Germany to solve the crisis and never mind if this something that was already said months ago."
"The constant stream of meetings keeps traders — especially potential sellers — on the sidelines, afraid to get short going into a meeting that could find a solution," said a report from U.S. energy consultancy Cameron Hanover.
Analysts were also mulling the impact of the death of former Libyan leader Moammar Gadhafi on the OPEC nation's oil production and exports. Before fighting started in February, Libya produced about 1.6 million barrels a day, but violence quickly reduced output to a trickle.
The drop in supply helped push prices to near $115 a barrel in early May.
Frankfurt's Commerzbank estimated Libya's current crude output at 430,000 barrels a day.
"Virtually all of the news emerging from Libya over the past six weeks has been positive on the production side," J.P. Morgan said in a report. "The oil market is discounting a relatively rapid return of at least the first 700,000 barrels per day of production."
Some analysts expect Libya's damaged infrastructure and infighting among factions to delay a return to prewar production levels.
"The violent death of Gadhafi is not expected to have a big impact on oil and we do not expect risk premiums in the region to decrease markedly for the time being," said analysts at JBC Energy in Vienna. "While the Libyan nation-building phase can now begin in earnest, the country remains a hotbed of uncertainty as rivalries between the different tribes must be laid to rest before lasting security can be achieved."
In other Nymex trading, heating oil rose 0.94 cent to $3.0360 per gallon and gasoline futures lost 0.08 cent at $2.6562 per gallon. Natural gas slid 2.5 cents to $3.605 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.
Copyright 2011 The Associated Press.