(Investing) – LONDON – Oil prices pared gains on Wednesday but rose for a second session, finding support from positive investor sentiment over U.S.-China trade talks to be held this weekend and signs of lower U.S. shale output.
futures climbed 41 cents a barrel, or around 0.7%, to $62.56 a barrel by 1219 GMT, while U.S. West Texas Intermediate crude was up 48 cents, or 0.8%, at $59.57 a barrel.
The U.S. and China are due to meet in Switzerland, which could be the first step toward resolving a trade war disrupting the global economy.
“It is clear that hopes are high with respect to trade talks,” said Bjarne Schieldrop, chief commodities analyst at SEB.
Both benchmarks plunged to four-year lows this week after OPEC+ decided to speed up output increases, stoking fears of oversupply at a time when U.S. tariffs have increased concerns about demand.
Still, some U.S. producers have signalled that they would cut spending, cautioning that the country’s oil output may have peaked, which is also contributing to the uptick in the market, analysts said.
“It’s also worth noting that the OPEC production increase at the weekend was fully priced in,” Saxo Bank analyst Ole Hansen said.
The U.S.-China trade talks come after weeks of escalating tensions that have seen duties on goods imports between the world’s two largest economies soar well beyond 100%.
But volatility is expected to persist on quicker-than-expected OPEC+ supply while U.S. policymaking remains unpredictable, said Tamas Varga, an analyst at PVM, a brokerage and consulting firm.
Additionally, conflict in the Middle East, between Israel and the Houthis increases the geopolitical risk premium, he said.
