Trade negotiations boost and tightening supply expectations help oil prices rebound.

On Wednesday during Asian trading hours, international oil prices rose for the second consecutive day, mainly driven by the imminent resumption of trade talks between China and the United States and the potential tightening of U.S. crude oil supply. Previously, oil prices had fallen to a four-year low, and signs of buying at these low prices supported a short-term rebound.

As of 1:13 AM Beijing time on Wednesday, Brent crude oil futures for June delivery rose 0.7% to $62.58 per barrel, while U.S. WTI crude futures increased by 0.8% to $59.14 per barrel. This rise extended Tuesday's rebound trend, when the market absorbed some buying from extremely low price levels.

The progress in Sino-U.S. trade relations has become a catalyst for this round of oil price increases. U.S. Treasury Secretary Scott Bessent and Trade Representative Jamison Greer will meet with senior Chinese officials face-to-face in Switzerland this week. The two countries' official agencies confirmed the itinerary in statements released on Tuesday evening, marking the first clear signs of reconciliation in Sino-U.S. trade relations since April, bringing a ray of hope to global markets.

Although U.S. President Trump emphasized, "No rush to sign any trade agreement" that day, the mere initiation of negotiations helps alleviate the tense atmosphere that previously troubled the market. The ongoing Sino-U.S. trade frictions have been widely considered as one of the main factors suppressing oil demand, with traders worried that slowing global economic growth will curb energy consumption.

Meanwhile, domestic supply news from the U.S. also provided upward support for oil prices. Several major shale oil producers have issued pessimistic outlooks, suggesting that the growth momentum of U.S. crude oil production may have peaked. Leading company Diamondback Energy (NASDAQ: FANG) stated on Monday that U.S. daily oil production may have reached a peak and is expected to decline in the coming months. Another major producer, Coterra Energy (NYSE: CTRA), delivered a similar signal, stating it would reduce the number of active drilling rigs.

These companies' statements have stimulated market bets on a long-term tightening of U.S. supply, partially offsetting the downward pressure from OPEC+'s recent production increase announcement. At the same time, preliminary industry data showed a significant drop in U.S. crude inventories, further supporting the market's bullish sentiment. Official inventory data will be released later that evening, and investors will be closely watching to see if the trend continues.

Although oil prices have been in a rebound trend, the uncertainty of the global demand outlook limits the gains. Recent weak economic data from the U.S. and China remind investors not to overlook the risks of slowing global growth. Additionally, the market is awaiting the upcoming Federal Reserve rate decision, whose policy stance may indirectly affect oil price trends.

In summary, the resumption of Sino-U.S. talks and the constraint on U.S. production are injecting new momentum into the international oil market, but the long-term direction remains highly dependent on the evolution of macroeconomic and policy developments.

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