Oil prices rose over three per cent on Tuesday as investors grew more confident that a brewing trade dispute between the United States (U.S.) and China may be resolved without harming the global economy.
Brent crude futures were up at $70.97 a barrel by 2:10 p.m. EST (1810 GMT). It was Brent’s largest single-day percentage jump since November.
West Texas Intermediate crude futures gained 3.3 per cent to $65.49 a barrel.
“This has been another huge day,” said Bill Baruch, president of Blue Line Futures in Chicago. “There’s soothing trade war fears, geopolitics, and a weaker dollar at play,” Baruch said.
President Xi Jinping on Tuesday promised to open China’s economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between his country and the United States.
Both crude benchmarks have risen more than five per cent in the past two trading days.
Middle East tensions also supported prices on Tuesday, said Phillip Streible, analyst at RJO Futures in Chicago.
“Oil markets are getting a bounce on increasing speculation about Trump and Syria,” Streible said.
U.S. President Donald Trump promised a swift response to a suspected chemical attack in Syria.
Such a response is likely to increase the push for the United States to exit the Iran nuclear deal, Streible said, given Iran’s support of the Syrian government.
Departures from the accord would result in renewed sanctions against Iran, which would hurt its oil industry.
The U.S. Energy Information Administration said it expected domestic crude oil production to rise by 750,000 barrels per day (bpd) to 11.44 million bpd next year, more than previously expected.
The American Petroleum Institute will publish its storage data later in the day, and U.S. government data is due on Wednesday. Analysts anticipated a small build in U.S. crude stocks and a reduction in products inventories.
Meanwhile, Saudi Arabia’s Energy Ministry said it would keep exports below seven million bpd and restore its inventories to normal levels.