Oil prices rose on Tuesday as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from trade tensions between that country and the United States.
Brent crude settled 38 cents higher at $73.44 a barrel, after it reached a session high of $74.
U.S. West Texas Intermediate (WTI) was up 63 cents, or nearly 1 percent, to settle at $68.52. Earlier in the day, WTI reached a high of $69.05.
Reports that China will increase infrastructure spending helped lessen fears that U.S.-China trade tensions will reduce the country’s demand for oil, said Phil Flynn, analyst at Price Futures Group in Chicago.
“That’s going to be very bullish for oil demand,” Flynn said. “Infrastructure spending from China in the past had really jacked up oil demand, and I think that’s adding some outside support for prices.”
After an 8 percent decline from multi-year highs, buyers returned to the market, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
With notable reductions in crude inventories because of strong global growth, the supply-and-demand picture will remain favorable unless there are significant production increases from Russia and Saudi Arabia, McGillian said.
Still, commitments from the countries to increase production limited further gains, as they came amid easing supply disruptions in Libya and decreases in global refiner demand, said Jim Ritterbusch, president of Ritterbusch and Associates.
Market sentiment has been driven by fears that supply could be disrupted by confrontation in the Middle East or that Washington’s trade dispute with major trading partners could dampen global growth.
Iran, OPEC’s third-largest producer, which pumps 3.75 million barrels per day, has come under increasing U.S. pressure, with the administration of President Donald Trump pushing countries to cut all imports of Iranian oil beginning in November.
Saudi Arabia and other large producers are ramping up output to offset likely losses as the November deadline approaches.
Meanwhile, U.S. crude inventories at the U.S. crude futures delivery hub at Cushing, Oklahoma rose in the four days to Friday, according to data supplier Genscape, traders said.
Stockpiles at the hub were expected to fall for the 10th consecutive week, traders said. Total U.S. crude stocks were expected to have fallen 2.3 million barrels last week, according to a Reuters poll.
U.S. industry group the American Petroleum Institute will release inventory data for last week at 4:30 p.m. EDT (2030 GMT) on Tuesday. Official U.S. Energy Department data will follow on Wednesday.