Oil prices are rising as the market is optimistic about trade talks and supply reduction.
Oil prices witnessed a significant increase during trading on Wednesday, May 7, supported by multiple factors that helped offset some of the recent losses.
Positive expectations regarding trade talks between the United States and China, along with indications of a decrease in U.S. production, also contributed to supporting prices.
Brent crude futures rose by 0.82% to reach $62.66 per barrel, while U.S. West Texas Intermediate crude jumped by 0.9% to settle at $59.67 per barrel.
This increase comes after prices hit their lowest levels in four years, influenced by the decision of the "OPEC+" alliance to increase production, raising concerns about an oil supply surplus.
Analysts at "ING" bank pointed out that news of the resumption of trade talks between Washington and Beijing pushed prices higher, while warning of the need for tangible progress in reducing tariffs to boost demand expectations.
On the other hand, the recent low prices in recent weeks led U.S. energy companies like "Diamondback Energy" and "Coterra Energy" to reduce drilling operations, which may support prices in the medium term.
Daniel Hynes, chief commodity strategist at "ANZ" bank, confirmed that recent announcements indicate an expected decline in production in the coming months, referring to previous warnings about the impact of price declines on drilling activities.
Data from the American Petroleum Institute revealed a decrease in inventories by 4.5 million barrels, with initial estimates expecting a similar decline in official data.
Improvements in demand indicators, especially with increased consumer spending in China during the "Labor Day" holiday, as well as improved expectations for European company performance, also contributed to supporting prices.
The market remains awaiting developments in these factors and their impact on price trends in the upcoming period.
