LONDON • Oil extended its longest run of daily gains in 17 months on renewed efforts between the United States and China to reach a trade deal and expectations that the market will be tightened by Opec's output cuts.
Futures in New York rose as much as 1.6 per cent on Monday following six days of gains, the longest streak of increases since July 2017.
There's a "very good chance" the US gets a reasonable deal with China, Commerce Secretary Wilbur Ross told CNBC on Monday, as trade negotiations began in Beijing.
Meanwhile, expectations for a nationwide decline in US crude inventories alleviated worries about a supply glut.
Crude is seeing a tentative recovery after fears of oversupply and weakening global growth drove prices to their worst annual slump since 2015.
Futures are rebounding as the Organisation of the Petroleum Exporting Countries (Opec) and its allies start their pledged production cuts this month, led by Saudi Arabia, and after the US Federal Reserve signalled a hold in interest rate hikes that had spurred risk aversion and volatility across global financial markets.
"Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year," said Mr Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
"They can be very convincing when they choose to be. And so we see the potential for Brent crude to go to US$70 a barrel over the course of the year."
West Texas Intermediate (WTI) for February delivery increased as much as 77 US cents to US$49.29 a barrel on the New York Mercantile Exchange. Prices rose 8.8 per cent for six sessions up until Monday.
Brent for March settlement gained 97 US cents to US$58.30 a barrel on the ICE Futures Europe Exchange in London. The contract closed 0.5 per cent higher at US$57.33 on Monday. The global benchmark crude traded at an US$8.66 a barrel premium to WTI for the same month.
Investor confidence grew as trade talks showed signs of progress. "There is a confluence of factors helping - a big driver is progress in trade talks and hopes that global growth will be supported," said Mr Stephen Innes, head of trading for the Asia-Pacific at Oanda Corp. "The Fed's easier stance and Opec's commitment to cut production as well as expectations that inventories should drop are lending a hand to this positive investor sentiment."
American crude stockpiles probably declined by 1.75 million barrels last week, according to a median estimate in a Bloomberg survey of analysts ahead of US government data today. US inventories are near their lowest level in almost two months.