Oil prices rose on Thursday after falling more than $1 in the previous session, supported by hopes for a breakthrough in upcoming trade talks between the US and China, the world's two largest oil consumers.

Brent crude futures rose 51 cents, or 0.8%, to $61.63 a barrel, while U.S. West Texas Intermediate crude futures rose 57 cents, or 1%, to $58.64 a barrel by 0420 GMT.

"Optimism surrounding the US-China trade talks later this week is a major factor supporting the oil market recovery," said independent market analyst Tina Teng.

"Signs of an easing trade war have boosted market sentiment, fueling a recovery in oil prices in an oversold market." U.S. Treasury Secretary Scott Bessent is due to meet with China's top economic officials on May 10 in Switzerland for talks on the trade war that is disrupting the global economy. The two countries are the world's two largest economies and disruption from their trade dispute is likely to dampen growth in crude oil consumption.

US President Donald Trump on Wednesday suggested China should start trade talks, adding that he was not willing to cut US tariffs on Chinese goods to bring Beijing to the table. Bessent said the upcoming talks were a start, not an "advanced" discussion.

Weak demand concerns capped oil gains after the Federal Reserve kept interest rates steady but warned of growing economic uncertainty.

"The Fed signaled that interest rates are likely to remain on hold until the impact of tariffs becomes clearer. This is boosting the US dollar, adding to the headwinds facing broader commodity markets," ING analysts said in a report on Thursday.

A stronger US currency makes dollar-denominated oil more expensive for holders of other currencies and dampens demand.

Adding to concerns about weaker demand, US gasoline inventories rose last week, raising concerns among analysts that consumption will not pick up as the US enters its summer demand period later this month.

At the same time, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will increase their oil production, adding pressure on prices. (Newsmaker23)

Source: Reuters