Crude oil jumped the most since early January as the trade deadlock between China and the US showed signs of easing, calming fears that global economic growth would be endangered.
Futures surged as much as 5 per cent in London on Tuesday, topping $61 a barrel for the first time in more than a week.
Optimism swept across financial markets after the US delayed tariffs on some Chinese goods and Beijing said the two sides would hold talks in two weeks. New York-traded crude climbed 4.6 per cent.
“Some of the pessimism about oil demand and the trade war is being washed out of the market by these announcements,” said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts.
While Brent has gained the past three days, it is still down about 6 per cent this month.
Saudi Arabia’s pledge to curb exports in a matter of weeks has not been enough to offset production from US shale oilfields and fears of demand growth.
“We still have an undecided oil market,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“That may be surprising, given the renewed verbal intervention from oil producers increasingly frustrated to see that their medicine, production cuts, isn’t having the desired effect.”
In the US, West Texas Intermediate crude for September delivery rose $2.05 to $56.98 a barrel at 1.45pm on the New York Mercantile Exchange.
Brent for October settlement rose $2.58 to $61.15 on the Ice Futures Europe Exchange, after earlier rising by the most since January 9.
The global benchmark crude traded Tuesday at a $4.30 premium to West Texas Intermediate for the same month, a rebound after it had shrunk to the narrowest since March 2018.
The US will delay until mid-December a 10 per cent tariff on Chinese products on many holiday shopping items such as mobile phones and toys, US President Donald Trump said.
China said top officials from the countries spoke on Tuesday and will resume discussions in two weeks.
Expectations of declining US crude supplies are also driving bullish sentiment.
Inventories probably dropped by about 2.5 million barrels last week, according to the median estimate in a Bloomberg survey before Energy Information Administration data, which is due out on Wednesday.