NEW YORK, May 7 (Reuters): Oil prices steadied on Wednesday after bouncing back from a sharp sell-off earlier in the week as investors turned their focus to US-China trade talks this weekend.
Brent crude futures were down 11 cents a barrel, or around 0.18 per cent, at $62.04 a barrel by 10:07 a.m. ET (1407 GMT), while US West Texas Intermediate crude was also 11 cents, or 0.19 per cent, lower at $58.98 a barrel.
The US and China are due to meet in Switzerland, which could be the first step toward resolving a trade war disrupting the global economy.
"It is clear that hopes are high with respect to trade talks," said Bjarne Schieldrop, chief commodities analyst at SEB.
Both benchmarks plunged to four-year lows this week after OPEC+ decided to speed up output increases, stoking fears of oversupply at a time when US tariffs have increased concerns about demand.
Still, some US producers have signalled that they would cut spending, cautioning that the country's oil output may have peaked, which is also contributing to the uptick in the market, analysts said.
"It's also worth noting that the OPEC production increase at the weekend was fully priced in," Saxo Bank analyst Ole Hansen said.
The US-China trade talks come after weeks of escalating tensions that have seen duties on goods imports between the world's two largest economies soar well beyond 100 per cent.
But volatility is expected to persist on quicker-than-expected OPEC+ supply, while US policymaking remains unpredictable, said Tamas Varga, an analyst at PVM, a brokerage and consulting firm.
Additionally, conflict in the Middle East between Israel and the Houthis increases the geopolitical risk premium, he said. US government data on stockpiles is due at 10:30 a.m. ET (1430 GMT). Analysts polled by Reuters expect, on average, an 800,000-barrel decline in US crude oil stocks for last week.
Crude stocks fell by 4.5 million barrels in the week ended May 2, market sources said.
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