Oil prices rose more than 2 percent on Tuesday, supported by hopes that demand may rise more quickly if talks between U.S. and Chinese officials resolve the trade dispute between the world's two biggest economies.
U.S. West Texas Intermediate (WTI) crude oil futures climbed $1.22, or 2.5 percent to $49.74 a barrel by 12:25 p.m. EST (1725 GMT). The contract earlier touched a session high of $49.95, the most since Dec. 17.
Brent crude futures rose $1.32 a barrel, or 2.4 percent, to $58.65.
The talks are going well so far and will continue on Wednesday, U.S. delegation member Steven Winberg said.
These are the first face-to-face meetings between officials from the two countries since U.S. President Donald Trump and Chinese President Xi Jinping agreed in December to a 90-day truce in a trade war that has buffeted global financial markets.
Some analysts warned, however, that tensions could flare anew.
Oil traders also worried that a possible worldwide economic slowdown could dent fuel consumption. The hedge fund industry has cut significantly its bullish positions in crude futures.
Opec vs US Shale
Still, U.S. oil supply is surging. A steep rise in onshore shale drilling has helped make the United States the world's top producer, with crude production up 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.
The market is closely watching U.S. supplies, which analysts expect pulled back 3.3 million barrels in the latest week. If government data on Wednesday confirms that forecast, it would send a strong bullish signal to the market, said John Kilduff, a partner at Again Capital Management in New York.