By Stephanie Kelly
NEW YORK (Reuters) - Oil prices rose around 3% on Thursday, buoyed by hopes of a breakthrough in looming trade talks between the U.S. and China, the world’s two largest oil consumers.
Brent crude futures settled up $1.72, or 2.8%, at $62.84 a barrel. U.S. West Texas Intermediate crude rose $1.84, or 3.2%, to $59.91.
U.S. Treasury Secretary Scott Bessent will meet with China’s top economic official on May 10 in Switzerland for negotiations over a trade war that is disrupting the global economy. Optimism around those talks was providing support to the market, said SEB analyst Ole Hvalbye.
The countries are the world’s two largest economies and fallout from their trade dispute was likely to lower crude consumption growth.
Analysts cautioned that the recent tariff-driven volatility in the oil market was not over.
"The global risk premium that was pushing oil prices up and down during the past couple of years has been replaced by a tariff premium that will also be fluctuating in response to the latest headlines out of the Trump administration," Jim Ritterbusch, of U.S. energy consultancy Ritterbusch and Associates, said in a note.
In another trade development, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a "breakthrough deal" on trade that leaves in place a 10% tariff on goods imported from the UK while Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods.
On the supply front, the Organization of the Petroleum Exporting Countries and its allies in OPEC+ will increase its oil output, pressuring prices.
OPEC oil output edged lower in April despite a scheduled output hike taking effect, a Reuters survey found, led by a cut in Venezuelan supply on renewed U.S. attempts to curb the flows and smaller drops in Iraq and Libya.
Analysts at Citi Research lowered their three-month price forecast for Brent to $55 per barrel from $60, but maintained their long-term forecast of $60 a barrel this year.
A U.S.-Iran nuclear deal could drive Brent prices down toward $50 per barrel on increased global supply, but without a deal prices could rise to over $70, they added.
U.S. sanctions on two small Chinese refiners for buying Iranian oil have created difficulties receiving crude and led them to sell product under other names, sources familiar with the matter said, evidence of the disruption that Washington’s stepped-up pressure is inflicting on Tehran’s biggest oil buyer.