SINGAPORE - Oil prices jumped around 1.5 percent on Monday, pushed up by optimism that talks in Beijing can resolve a trade war between the United States and China, while supply cuts by major producers also supported crude.
Brent crude futures were at $57.93 per barrel at 0635 GMT, up 87 cents, or 1.5 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures were at $48.76 per barrel, up 80 cents, or 1.7 percent.
Financial markets were riding a relief rally on Monday on expectations that face-to-face trade negotiations between delegates from Washington and Beijing, starting on Monday, would lead to an easing in tensions between the two biggest economies in the world.
The United States and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other's goods. The dispute has weighed on economic growth.
In the latest sign of widespread economic slowdown that could also hit fuel demand, British new car sales in 2018 fell at their fastest rate since the global financial crisis a decade ago, preliminary data from the Society of Motor Manufacturers and Traders (SMMT) showed on Monday.
Goldman Sachs said in a note on Monday it had downgraded its average Brent crude oil forecast for 2019 from $70 per barrel to $62.50 a barrel because of "the strongest macro headwinds since 2015."
J.P. Morgan said in a note late last week that "the 3 percent global growth pace we have been anticipating for the next two quarters looks increasingly challenging."
The bank also said that "bond and commodity markets appear to be pricing in on average close to a 60 percent chance of a U.S. recession over the coming year compared to a 40 percent chance by our economists and 27 percent chance by the consensus."
OPEC CUTS, RISING U.S. SUPPLY
Despite the likelihood of a slowdown, crude future prices were being supported by supply cuts started late last year by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC Russia.
Goldman said the cuts would result in a gradual increase in spot crude prices in 2019 as high inventories revert to their 5-year averages.
OPEC oil supply fell in December by 460,000 barrels per day (bpd), to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia.
The cuts are aimed at reining in swelling supply, especially in the United States.
Because of record U.S. crude oil production of 11.7 million bpd, American fuel stockpiles are rising, according to weekly data by the Energy Information Administration (EIA) released on Friday.
Crude oil inventories rose by 7,000 barrels in the week ended on Dec. 28, to 441.42 million barrels, more than 5 million barrels above their 5-year average.
Distillate and gasoline stocks, however, rose by a whopping 9.5 million and 6.9 million barrels, to 119.9 million and 240 million barrels respectively, the EIA data showed.