Oil rises as US, China teams to meet following Trump, Xi trade call

Oil prices edged higher on Thursday, recovering from the previous day's drop, on news that the U.S. and China agreed to more trade talks, following a phone call between U.S. President Donald Trump and Chinese leader Xi Jinping.

Brent crude futures were up 35 cents, or 0.5%, at $65.21 a barrel at 1:14 p.m. EDT. U.S. West Texas Intermediate crude rose 38 cents, or 0.6%, to $63.23 a barrel.

"If we step back from the brink of a major trade war, it will increase demand expectations for oil both in the U.S. and in China," said Phil Flynn, senior analyst with Price Futures Group.

Trump said on social media his call with Xi focused primarily on trade and led to "a very positive conclusion." He announced further lower-level U.S.-China discussions, saying "there should no longer be any questions respecting the complexity of Rare Earth products."

"We're in very good shape with China and the trade deal," he told reporters later.

The official Xinhua news agency reported earlier that the talks were held at Trump's request.

The news encouraged investors a day after oil fell 1% as data showed U.S. gasoline and distillate stockpiles grew more than expected, reflecting weaker demand in the world's largest economy.

Geopolitical events and wildfires in Canada that threaten to reduce oil production are providing further price support, despite a potentially oversupplied market in the second half of the year with expected OPEC+ production hikes, PVM analyst Tamas Varga said.