Oil prices rose alongside world markets on Tuesday as US President Donald Trump said a Singapore summit with Kim Jong Un of North Korea had made “a lot of progress”.
This announcement boosts hope for an agreement to end a nuclear stalemate on the Korean peninsula.
Brent futures traded at $ 76.55 per barrel at 0547 GMT.
Futures contracts for West Texas Intermediate (WTI) US crude were $ 66.24 per barrel.
Markets were held back by signs of higher output from major producers, Russia, the United States and Saudi Arabia.
Traders said the activity was also muted before a meeting between the Organization of the Petroleum Exporting Countries (OPEC) and some of its allies on June 22.
The meeting can determine the crude production policy of several major producers.
Global markets rose after Trump said a closely monitored summit with Kim on Tuesday had made “a lot of progress”.
He was “really very positive” after he and Kim signed a document following talks to end a nuclear stalemate on the Korean peninsula.
“Any positive outcome could be good news for markets,” said Shannon Rivkin, investment director at Australia’s Rivkin Securities.
Beyond the Singapore summit, crude oil has generally been supported by strong demand and voluntary cuts by OPEC.
Some fundamentals in the oil market, however, point to lower prices, with output from the three largest producers, Russia, the United States and Saudi Arabia rising.
Russian production has risen from less than 11 million barrels a day (bpd) to 11.1 million b / d in early June.
In the United States, production has increased by almost a third over the past two years, reaching a record 10.8 million bpd.
“The deluge of U.S. crude production continues to hold the top-side in check,” said Stephen Innes, head of trading at futures brokerage OANDA.
The main exporter, Saudi Arabia, which has so far led OPEC’s efforts to capture supplies, also shows signs of increased production.
In the physical oil markets, the Middle East’s light crude oil grades are expected to trade at discounts on their respective official selling prices due to ample supplies in Asia, including the United States, four commercial sources said Tuesday.
Saudi Arabia told OPEC that it increased oil production by just over 10 million bpd in May from 9.9 million bpd in April.
“This fits with the theory that the Saudis and Russians are subtly moving toward a change to the agreement at this month’s meeting,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Other producers are also increasing their production.
Kazakhstan’s oil production in the first five months of 2018 rose 6.4 percent from the same period a year ago to 37.7 million tonnes (1.83 million bpd), announced Tuesday the Deputy Minister of Energy Makhambet Dosmukhambetov.
OPEC, as well as some non-OPEC producers, including Russia, have begun to suspend production in 2017 to end excess world supply and support prices.
OPEC and its partners are to meet in Vienna to discuss policies.
“Expect more of the same whippy markets driven by rumours and innuendo ahead of the June 22 Vienna OPEC meeting,” Mr Innes said.