Oil prices rose more than 2 percent on Tuesday, extending gains ahead of expected output cuts by producer cartel OPEC and a mandated reduction in Canadian supply.
International Brent crude oil futures rose 89 cents, or 1.4 percent to a high of $62.58 by 10:21 a.m. ET (1521 GMT). The contract earlier rose as high as $63.58.
U.S. West Texas Intermediate (WTI) crude futures were up 53 cents, or 1 percent, at $53.48, off a session high of $54.55.
Both benchmarks climbed around 4 percent on Monday after U.S. President Donald Trump and Chinese President Xi Jinping agreed at a meeting of the Group of 20 industrialized nations (G-20) to pause an escalating trade dispute.
“The market seems positively oriented following the G-20 developments and heading into the OPEC meeting on Thursday,” BNP Paribas commodities strategist Harry Tchilinguirian told Reuters Global Oil Forum.
The Middle East-dominated OPEC will meet on Thursday in Vienna to agree future output and will discuss strategy with other producers outside OPEC, including Russia.
OPEC and its allies are working towards a deal to reduce oil output by at least 1.3 million barrels per day (bpd), OPEC sources have told Reuters, adding that they were still talking to Russia about the extent of its production cuts.
“We expect OPEC to follow suit and agree to a production cut in Vienna this coming Thursday,” U.S. bank Goldman Sachs said in a note to clients.
“A cut in OPEC and Russia production of 1.3 bpd will be required to reverse the ongoing counter-seasonally large increase in inventories.”
It added that it expected a joint effort by OPEC and Russia to withhold supply to push Brent oil prices “above the mid-$60 per barrel level.”
Helping OPEC in its efforts to rein in emerging oversupply was an order on Sunday by the Canadian province of Alberta for producers to scale back output by 325,000 bpd until excess crude in storage is reduced.
OPEC’s biggest problem is surging production in the United States where output, mostly from its southern shale fields, has grown by around 2 million bpd in a year to more than 11.5 million bpd.
Barclays bank pointed out in a note to clients that oil production in the state of Texas alone “reached 4.69 million bpd in September, compared with Iraqi output of 4.66 million by our estimates”.
Iraq is OPEC’s second-biggest oil producer, behind Saudi Arabia.