Oil prices rose slightly overnight as the United States and China appeared closer to reaching a formal agreement to end a trade war that has slowed global economic growth while Russia said it would speed up its crude production cuts.
Gains were tempered by a drop in equity indexes, which weakened sentiment on oil markets.
Brent crude futures rose 21 US cents to $US65.28 a barrel.
US West Texas Intermediate (WTI) crude futures rose 33 US cents to $US56.13 a barrel.
The US and China are nearing a deal that would roll back US tariffs on at least $US200 billion worth of Chinese goods as China pledges to make structural economic changes and end tariffs on the United States, a source briefed on negotiations said on Sunday.
‘The optimism surrounding the trade situation had the market bid pretty early,’ said Bob Yawger, director of energy futures at Mizuho.
‘We followed the equity markets into positive territory, but as the equity markets started to fade, the rally in crude oil started to fade also.’
US equities, initially boosted by trade deal hopes, lost steam around midday.
The benchmark S&P 500 Index was last down about 1 per cent.
Supply cuts from the Organisation of the Petroleum Exporting Countries and non-member producers, including Russia, continued to support oil.
Russia, the biggest of OPEC’s non-member allies, plans to speed up crude output cuts this month, Energy Minister Alexander Novak said.
By month-end it will have cut production by 228,000 barrels per day from the October level, Novak said.
OPEC and its partners, known as OPEC+, will likely decide on a new output policy in June instead of during the group’s April meeting in Vienna, three OPEC sources told Reuters.
OPEC+ is expected to extend supply cuts at its June meeting, but much depends on the extent of US sanctions on OPEC members Iran and Venezuela, the sources said.
Crude supply from OPEC hit a four-year low in February, a Reuters survey indicated, as top exporter Saudi Arabia cut production more than it had agreed to, and as US sanctions on Venezuelan oil took effect.
The cuts have helped crude prices rally more than 20 per cent so far this year despite surging US production.
US crude oil stockpiles were seen rising last week, while refined products likely fell for a third consecutive week, a preliminary Reuters poll showed on Monday.