Oil prices extended gains following a more than 3% rally in the previous session, buoyed by renewed hopes of easing tensions between the United States and China. The two economic powerhouses have agreed to resume trade negotiations, offering a potential breakthrough in their prolonged standoff.
Brent crude edged closer to $63 per barrel, while West Texas Intermediate (WTI) hovered near the $60 mark. The price uptick comes ahead of a key meeting in Switzerland later this week, where U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are set to hold talks with Chinese officials. These discussions mark the first formal engagement since President Donald Trump’s imposition of sweeping tariffs that escalated the trade conflict.
Despite the recent surge, oil has been trending downward since late January amid ongoing trade uncertainties and a decision by OPEC+ to continue increasing previously withheld supply. The sustained price pressure is expected to dampen U.S. shale production, according to Diamondback Energy Inc., the largest independent oil producer in the Permian Basin.
In a revised outlook, the U.S. Energy Information Administration (EIA) trimmed its crude production forecast for the year, now projecting daily output at 13.42 million barrels. This estimate does not yet reflect the latest production increases agreed upon by OPEC and its allies over the weekend.
Adding to the bullish sentiment, the American Petroleum Institute reported a substantial 4.49 million-barrel decline in U.S. crude inventories last week, including a drop at the key storage hub in Cushing, Oklahoma. Official data from the EIA is expected to be released later on Wednesday.
Related topics:
How Do You Invest in Oil Futures?
