Oil prices recorded limited gains on Monday after U.S. President Donald Trump extended a deadline for trade talks with the European Union, easing concerns about U.S. tariffs on the bloc that could hurt the global economy.

Brent crude futures rose 18 cents, or 0.28%, to $64.96 a barrel by 0653 GMT while U.S. West Texas Intermediate crude was up 17 cents, or 0.28%, at $61.7 a barrel.

"A nice push higher in crude oil and U.S. equity futures this morning after U.S. President Trump extended the deadline," IG market analyst Tony Sycamore said.

Trump said he agreed to extend a deadline for trade talks with the European Union until July 9 after Ursula von der Leyen, president of the European Commission, said the bloc needed more time to strike a deal.

Trade and tariff headlines, along with ongoing fiscal concerns, will be the main wild card for risk sentiment and crude oil this week, Sycamore said.

Brent and WTI extended gains after settling 0.5% higher on Friday as limited progress in U.S.-Iran nuclear talks alleviated concerns of more Iranian oil returning to global markets and U.S. buyers covered positions ahead of the three-day Memorial Day weekend.

Prices were also buoyed by data from energy services firm Baker Hughes (BKR.O), opens new tab that showed U.S. firms, under pressure from lower oil prices, cut the number of operating oil rigs by 8 to 465 last week, the lowest since November 2021.

The gains were capped by expectations that the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, could decide to increase output by another 411,000 barrels per day (bpd) for July at next week's meeting.

Suvro Sarkar, lead energy analyst at DBS Bank, said oil was already under pressure from OPEC+'s accelerated output hike strategy and what he called a "mini oil price war".

"Any price gains are likely to be dampened by the OPEC+ decision in coming days," he added.

Reuters reported this month that the group could unwind the rest of its 2.2 million bpd voluntary production cut by the end of October, having already raised output targets by about 1 million bpd for April, May and June.

"Oil markets may face an oversupply in the second half of 2025, alongside potentially weakened demand due to Trump's inclination towards universal tariffs. This situation could create a perfect storm for falling oil prices," said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.

Source: Reuters