Oil prices rose on Wednesday, holding slightly above recent four-year lows, as investors focused on U.S.-China trade talks and signs of lower U.S. production.
Brent crude futures climbed 73 cents a barrel, or 1.2%, to $62.88 a barrel by 0650 GMT, while U.S. West Texas Intermediate crude was up 81 cents, or 1.4%, at $59.90 a barrel.
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Both benchmarks plunged to a four-year low recently after OPEC+' decided to speed up output increases, stoking fears of oversupply at a time when U.S. tariffs have increased concerns about demand.
"News that the U.S. and China will start trade talks this weekend has Brent crude trading higher, extending a relief rally in oil," said commodities strategists at ING on Wednesday.
"Yet while negotiations would help improve sentiment in the oil market, we'll need to see significant progress on lowering tariffs to improve the demand outlook," ING added.
Meanwhile, lower oil prices in recent weeks have prompted some U.S. energy firms, including Diamondback Energy (FANG.O), opens new tab and Coterra Energy (CTRA.N), opens new tab, to announce rig reductions, which analysts said should support prices over time by reducing output.
The latest announcements suggested output will weaken in the coming months, said ANZ Bank senior commodity strategist Daniel Hynes. "We warned last month that falling prices and declining drilling activity was raising the risk of U.S. oil output falling."
Crude stocks fell by 4.5 million barrels in the week ended May 2, market sources said, citing American Petroleum Institute figures on Tuesday.
U.S. government data on stockpiles is due at 10:30 a.m. ET (1430 GMT). Analysts polled by Reuters expect, on average, an 800,000-barrel decline in U.S. crude oil stocks for last week.
Prices also drew support from signs of demand improving. Consumers in China increased spending during the May Day celebration and as market participants returned after the five-day holiday.
In Europe, companies are expected to report growth of 0.4% in first-quarter earnings, an improvement over the 1.7% drop analysts had expected a week ago.
The U.S. and Ukraine have signed a deal to give the United States preferential access to new Ukrainian minerals deals and fund investment in Ukraine's reconstruction.
The Federal Reserve is widely expected to leave U.S. interest rates unchanged on Wednesday as tariffs roil the economic outlook.
