The prices of crude oil rose on Monday as hopes for an end to the year long tariff row between the United States and China approached a close.
Also the production cut deal by members and allies of the Organization of Petroleum Exporting Countries, OPEC, contributed to price rally.
International Brent futures were at 65.25 dollars a barrel at 07:13 GMT, up 18 cents, or 0.3 per cent, from their last close, while US West Texas Intermediate crude futures were at 55.94 dollars per barrel, up 14 cents or 0.3 per cent.
There are indications that US and China are close to a deal that would roll back US tariffs on at least 200 billion dollar worth of Chinese goods, just as Beijing has also pledged structural economic changes and elimination of retaliatory tariffs on US goods, a source briefed on negotiations said on Sunday in Washington.
The “substantive progress” China and the US have made in their trade talks has been “well-received” in both countries and around the world, a senior Chinese official said on Monday.
According to a Reuters’ survey, Supply from OPEC fell to a four-year low in February, as top exporter, Saudi Arabia and its allies over-delivered on the group’s supply pact while Venezuelan output registered a further involuntary decline.
“OPEC exports are off by over 1.5 million barrels per day (bpd) since November,” Barclays bank said in a note released on Sunday.
“The supply picture looks generally tighter this year,” said energy analysts at Fitch Solutions in a note on Monday, adding they expected Brent to average 73 dollars per barrel in 2019.
There are also indications that Oil prices have been further pushed up by US sanctions against OPEC-members Iran and Venezuela. Barclays bank is of the view that this has resulted in a reduction of around two million bpd in global crude supply.
There are also signs that the US oil production boom of the past years, which has seen crude output rise by more than two million bpd since early 2018 to more than 12 million bpd, may slow down.