Jan. 8 (UPI) -- Crude oil prices rose early Tuesday helped by reports of production cuts in Saudi Arabia with expectations that any positive news from trade talks between the United States and China could strengthen prices.
West Texas Intermediate front-month future prices rose just over 1 percent to $49.02 per barrel as of 7:47 a.m. EST while Brent crude futures gained 1.2 percent to $58.02 per barrel.
"As the market began to gain clarity towards trade with the announcement of U.S.-China trade talks, and confirmation on Saudi output cuts prices, prices recovered almost $7 per barrel to reach the $49 level ahead of this week's inventory reports," Amir Hekmati, oil futures spec trader at Lucid Energy, told UPI early Tuesday.
WTI prices have seen a recovery from December lows of $42.53 per barrel during the Christmas holiday. They are still considerably below from over $76 per barrel on October 3.
"If trade talks continue to move in a positive direction, and inventory reports confirm OPEC output cuts by showing draws, we will see continued buying pressure," he added.
The trade talks are important because the Chinese economy has shown signs of slowing down after trade tariffs were imposed last year by the United States as part of a trade dispute. China is the world's biggest importer of crude oil and any slowdown there would affect demand for crude oil.
The Energy Information Administration will publish its next weekly inventory report Wednesday morning.
Hekmati's comments came after the United States and China on Monday restarted talks aimed at seeking an end to trade tariff exchanges. The United States is demanding China to stop what it considers unfair trade practices.
OPEC nations, led by Saudi Arabia, agreed on December 7 to reduce crude exports by 800,000 barrels per day starting in January in a bid to try to support higher oil price levels. Non-OPEC nations, mainly Russia, agreed to also reduce exports by 400,000 barrels per day.
In 2018 crude oil prices surged after the United States announced in May that it was going to impose nuclear-related sanctions against Iran starting Nov. 5.
However, on Nov. 5 the United States announced waivers so that the biggest buyers of Iranian oil could continue. The waivers are set to expire in March, and the market will wait to see if they are renewed.
The announcement of waivers coincided with reports of surging crude oil output in the United States, which last year became the world's biggest crude oil producer with output surpassing that of Russia and Saudi Arabia.
Reports last week that the U.S. Federal Reserve would be more patient in evaluating future interest rate increases have also contributed to gains this week.