Crude oil prices moved up sharply on Tuesday, extending gains to a seventh successive session, riding on optimism about U.S.-China trade discussions and reports about output reductions by oil producers.
Crude oil futures for February ended up $1.26, or 2.6%, at $49.78 a barrel.
On Monday, crude oil futures ended up $0.56, or 1.2%, at $48.52 a barrel.
High level trade talks between U.S. and Chinese officials entered the second day today. A positive outcome from the discussions would help the two nations strike a long term trade deal and result in economic revival in China and boost the global economy.
In a fresh sign that discussions are moving in the right direction, the U.S. and Chinese negotiators have reportedly agreed to extend trade talks until Wednesday. Earlier in the day, U.S. President Donald Trump tweeted, "Talks with China are going very well!"
Oil's uptick is also supported by recent reports about Saudi Arabia looking to cut crude exports and drop in output from OPEC.
According to reports, Saudi Arabia is likely to cut crude exports by 800,000 barrels per day from November levels, to 7.1 million barrels a day by end January. The kingdom is aiming to lift lift crude oil prices to $80 a barrel mark in order to help cover a surge in government spending.
However, it is still feared that energy demand from China may not see any significantly sharp increase in the near term and this could cap oil's upside.
Last week, a survey from Reuters showed oil output from OPEC fell by 530,000 barrels a day to 32.6 million a day in December, marking the sharpest pullback since January 2017 as top exporter Saudi Arabia throttled back production.
Meanwhile, traders were looking ahead to weekly oil reports from the American Petroleum Institute and U.S. Energy Information Administration, due later today and tomorrow morning, respectively. U.S. crude production rose by about 2 million barrels per day to a record 11.7 million barrels per day in 2018, contributing substantially to the sharp decline in crude oil prices during the second half of the year.
The material has been provided by InstaForex Company -
www.instaforex.com