Oil prices rose on Wednesday, holding just above a four-year low, as investors focused on US-China trade talks and signs of declining US output.
Brent crude futures were up 44 cents a barrel, or 0.7%, at $62.59 a barrel by 0400 GMT, while US West Texas Intermediate crude futures were up 50 cents, or 0.9%, at $59.59 a barrel.
Both benchmarks have slumped to four-year lows recently after OPEC+ decided to accelerate output increases, stoking concerns about oversupply at a time when US tariffs have raised concerns about demand.
"News that the US and China will start trade talks later this week sent Brent crude higher, extending the oil rally," commodity strategists at ING said on Wednesday.
"While negotiations will help boost sentiment in the oil market, we need to see significant progress on lowering tariffs to improve the demand outlook," ING added.
Meanwhile, lower oil prices in recent weeks have prompted several U.S. energy companies including Diamondback (NASDAQ:FANG) Energy and Coterra Energy (NYSE:CTRA) to announce rig cuts, which analysts say will support prices over time by reducing production.
The latest announcements suggest production will be weaker in the coming months, said ANZ Bank senior commodity strategist Daniel Hynes. "We warned last month that falling prices and lower drilling activity were increasing the risk of a decline in U.S. oil production."
Crude stocks fell by 4.5 million barrels in the week to May 2, market sources said, citing figures from the American Petroleum Institute on Tuesday. [API/S]
U.S. government data on stocks is due at 10:30 a.m. ET (1430 GMT). Analysts polled by Reuters had forecast, on average, a decline of 800,000 barrels in U.S. crude stocks last week. [EIA/S]
Prices also found support from signs of improving demand. Consumers in China increased spending during May Day celebrations and as market participants returned from a five-day holiday.
In Europe, companies are expected to report a 0.4% increase in first-quarter profits, an improvement from the 1.7% decline analysts had expected a week ago.
The Federal Reserve is widely expected to leave U.S. interest rates unchanged on Wednesday as tariffs rattled the economic outlook.(Newsmaker23)
Source: Investing.com
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