NEW YORK - Oil prices rose nearly 3 percent on Tuesday as investors grew more confident that a brewing trade dispute between the United States and China may be resolved without harming the global economy.
Brent crude futures were up $2, or 2.9 percent, at $70.65 a barrel by 12:53 (1653 GMT). West Texas Intermediate crude futures also gained 2.9 percent, or $1.85, to $65.27 a barrel.
President Xi Jinping on Tuesday promised to open China's economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between his country and the United States.
Equities markets gained on the indication that a trade war is increasingly unlikely.
Both benchmarks have risen roughly 5 percent in the past two trading days. Brent is only 0.6 percent shy of its 2018 peak of $71.05 hit in late January. WTI is about 2 percent below its 2018 peak of $66.66.
"It's not so much 'risk on/risk off', as it is 'trade war on/trade war off' and, at the moment, we're 'trade-war off,'" London Capital Group's Jasper Lawler said.
Concerns over a possible trade war between the two largest economies contributed to a more than four percent decline in the prices of both oil benchmarks last week.
Middle East tensions also supported prices on Tuesday, said Phillip Streible, analyst at RJO Futures in Chicago.
"Oil markets are getting a bounce on increasing speculation about Trump and Syria," Streible said.
U.S. President Donald Trump promised a swift response to a suspected chemical attack in Syria. Such a response is likely to increase the push for the United States to pull out of the Iran nuclear deal, Streible said, given Iran's support of the Syrian government.
Departures from the accord would result in renewed sanctions against Iran, which would hurt its oil industry.
The American Petroleum Institute will publish storage data later on Tuesday. Analysts anticipate a small build in crude stocks and a reduction in products inventories.
The U.S. Energy Information Administration said on Tuesday it expected domestic crude oil production to rise by 750,000 barrels per day (bpd) to 11.44 million bpd next year, more than previously expected.
Meanwhile, Saudi Arabia's Energy Ministry said it would keep exports below 7 million bpd and restore its inventories to normal levels.