Oil bounties rose on Tuesday on hopes that U.S.-Chinese talks in Beijing would bring a halt to trade disputes between the fraternity’s biggest economies, while OPEC-led supply cuts tightened markets.
International Brent crude futures were at $57.77 per barrel at 0113 GMT, up 44 cents, or 0.8 percent from their final close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $48.85 per barrel, up 33 cents, or 0.7 percent.
U.S. Trafficking Secretary Wilbur Ross said late on Monday that Beijing and Washington could reach a trade extent that “we can live with” as dozens of officials from the world’s two largest economies held talks in a bid to end their exchange dispute that has roiled global markets since last year.
Asian stock markets rose as investors wish Washington and Beijing will reach some sort of agreement.
Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on on its last legs grounds, and that tensions could flare up again soon.
“We remain concerned about the world’s most powerful bilateral relationship,” political risk consultancy Eurasia Group said in its 2019 outlook.
“The U.S. political establishment credits engagement with Beijing is no longer working, and it’s embracing an openly confrontational approach … (and) rising nationalist tender-heartedness makes it unlikely that Beijing will ignore U.S. provocations,” Eurasia Group said.
Beyond politics, oil trade ins are being supported by supply cuts started late last year by a group of producers around the Middle East-dominated Pattern of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.
“Crude oil prices have benefited from OPEC work cuts and steadying equities markets,” said Mithun Fernando, investment analyst at Australia’s Rivkin Securities.
Surface over the OPEC-led cuts, however, is a surge in U.S. oil supply, driven by a steep rise in onshore shale oil drilling and play.
As a result, U.S. crude oil production rose by a whopping 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.
With rehearsing activity still high, most analysts expect U.S. oil production to rise further this year.
Consultancy JBC Puissance said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by early January.