Oil prices rose on Tuesday on hopes of progress towards a trade agreement between the United States and China, the world’s biggest oil users, and predictions of a draw on U.S. crude inventories.
West Texas Intermediate crude was up 55 cents at $58.44.
Brent crude gained 58 cents to $64.14.
Top U.S. and Chinese trade negotiators held a phone call on Tuesday morning, China’s Commerce Ministry said, as the two sides try to hammer out a so-called Phase 1 deal in a trade war that has dragged on for 16 months.
The call took place amid heightened tensions, with China saying it had summoned the U.S. ambassador on Monday to protest against the passage in the U.S. Congress of the Hong Kong Human Rights and Democracy Act.
“The optimism that the trade conflict will at least ease somewhat is currently preventing prices from falling,” said Commerzbank analyst Carsten Fritsch.
“The positive effect this is having on the oil price is more psychological in nature,” he added, noting that he does not expect oil demand to pick up noticeably even after any partial agreement is signed.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on Dec. 5, followed by talks with the broader OPEC+ group featuring other producers that have agreed to cut output, including Russia.
“The current consensus is that the OPEC+ supply agreement will be rolled over for at least three months at the group’s next meeting with special emphasis on stricter compliance,” Tamas Varga of oil brokerage PVM said.
The head of the International Energy Agency told Reuters that OPEC countries should make the right decision for a “very fragile” global economy.
Predicting strong oil production growth from the non-OPEC countries, especially the United States, Brazil, Norway and Guyana, Fatih Birol said: “There will be lots of oil in the markets. I hope they will make the right decision for themselves and for the global economy.”
Crude stockpiles in the United States are expected to have declined by 300,000 barrels last week, according to a Reuters poll of analysts.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA).
“Confirmation of a stock draw from the API today and the EIA tomorrow could offer some immediate support to the market, with the last stock drawdown seen in mid-October,” said ING analyst Warren Patterson.