Oil rises on reports OPEC may extend cuts, US-China talks

OPEC and allies to meet next month when they are likely to extend output curbs

LONDON: Oil prices rose on Thursday after a Reuters' report showed OPEC and its allies are likely to extend output cuts until mid-2020 while fresh reports emerged that China has invited US negotiators for a new round of talks.

Brent crude rose $0.15, or 0.2%, to $62.55 a barrel by 1300 GMT, while the West Texas Intermediate crude was up $0.25, or 0.4%, at $57.26.

Both benchmarks had fallen earlier in the session.

To support oil prices, OPEC and its allies are likely to extend output cuts when they meet next month with non-OPEC producer Russia, according to OPEC sources.

The sources said that formally announcing deeper cuts looked unlikely for now although a message about better compliance with existing curbs could be sent to the market.

Russian President Vladimir Putin said on Wednesday Russia and OPEC had "a common goal" of keeping the oil market balanced and predictable, and Moscow would continue cooperation under a global deal cutting oil supply.

Amid rising tensions between the United States and China, US President Donald Trump is expected to sign two bills passed by Congress intended to support protesters in Hong Kong, a move likely to enrage China.

A Reuters report said completion of a phase one US-China trade deal could slide into year.

"Under this scenario, both equities and oil are expected to come under pressure. As talks hit a snag, an upside breakout from the current trading range all of a sudden has become less imminent," Tamas Varga of oil brokerage PVM said.

However, the Chinese commerce ministry said that China would strive to reach the phase one trade agreement with the United States.

The Wall Street Journal also reported on Thursday, citing unnamed sources, that China had invited top US trade negotiators for a new round of talks in Beijing.

Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy, the Organisation for Economic Cooperation and Development (OECD) warned on Thursday, noting the global economy is growing at the slowest pace since the financial crisis.

"In the short term, oil demand is directly tied to global GDP growth and thus the ongoing uncertainty surrounding US-China trade talks will hamper global growth," Ehsan Khoman, head of MENA research and strategy at MUFG, said.