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Oil prices rose about 1 percent on Monday, boosted by reports that the United States and China could reach a formal agreement as early as this month to end a tit-for-tat trade war that has limited global economic growth.
Brent crude futures were up 45 cents to $65.52 a barrel by 11:54 a.m. EST (1654 GMT). U.S. West Texas Intermediate (WTI) crude futures rose 53 cents, or 1 percent, to $56.33 a barrel.
Washington and Beijing appeared close to a deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods as China pledges to make structural economic changes and end tariffs on the United States, a source briefed on negotiations said on Sunday.
“Growing anticipation of a positive outcome from U.S.-China trade talks has rendered a boost to oil prices in today's trading session,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
Supply cuts from the Organization of the Petroleum Exporting Countries and non-member allies, including Russia, also continued to support oil futures.
OPEC and its partners, known as OPEC+, will likely decide on a new output policy in June instead of during the group's April meeting in Vienna, three OPEC sources told Reuters.
OPEC and its allies are expected to extend its supply reduction pact at its June meeting, but much depends on the extent of U.S. sanctions on OPEC members Iran and Venezuela, the sources said.
Crude supply from OPEC fell to a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia cut production more than it had agreed to, and as U.S. sanctions on Venezuelan oil took effect.
The cuts have helped crude prices rally more than 20 percent so far this year.
U.S. energy companies last week cut the number of active oil rigs to their lowest in almost nine months as some producers follow through on plans to cut spending.
Hedge funds and other money managers raised their net long, or bullish, positions on Brent crude by 15,887 contracts to 291,336 in the week to Feb. 26.
“While much of the move higher in the market has come about due to short covering, in more recent weeks we have seen fresh longs starting to return to the market, suggesting that sentiment is turning more positive,” ING analysts said.
(Additional reporting by Ahmad Ghaddar in London, Henning Gloystein in Singapore and Colin Packham in Sydney. Editing by Marguerita Choy)