Oil rose on Friday after China said it would hold talks with the United States to look for solutions to a trade dispute, while signs of lower crude supply also supported prices. U.S. crude oil was up 81 cents at $47.90.
The Organization of the Petroleum Exporting Countries cut crude output in December, a Reuters survey showed, and the American Petroleum Institute (API) reported a drop in U.S. crude inventories.
Brent crude, the global benchmark, rose 84 cents to $56.79 a barrel by 0932 GMT.
“Jitters over the health of the global economy look set to endure but are being lost on the oil market, at least for the time being,” said Stephen Brennock of oil broker PVM.
“That said, whether this bout of price strength can be sustained is far from certain.”
Oil gained further support from the latest supply report from the API industry group, which said on Thursday that U.S. crude stocks fell by 4.5 million barrels last week.
Both benchmarks are on track for solid gains in the first week of 2019 trading despite rising concerns that the China-U.S. trade war will lead to a global economic slowdown.
But in comments that helped oil to rally, China’s commerce ministry said it would hold vice-ministerial trade talks with U.S. counterparts in Beijing on Jan. 7-8.
The two nations have been locked in a trade war for much of the past year, disrupting the flow of hundreds of billions of dollars worth of goods, raising concern of slowing growth and roiling financial markets.
A survey from the Institute for Supply Management on Thursday showed U.S. factory activity slowed more than expected in December, and leading economies in Asia and Europe have reported a fall in manufacturing activity.
Despite the demand-side concerns, oil has received some support as supply cuts announced by the global coalition of producers known as OPEC+ kick in.
OPEC, Russia and other non-members agreed in December to reduce supply by 1.2 million barrels per day in 2019. OPEC’s share of that cut is 800,000 bpd.
The Reuters survey on Thursday found OPEC supply fell by 460,000 bpd in December, following assessments by Bloomberg and JBC Energy also showing a sizeable decline.
The focus now will be on whether producers deliver further curbs in January to implement the deal fully.
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