Also, refinery utilisation rates rose above 90% for the first time since early February. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up by 1% at $62.75 a barrel.
"Spot Brent crude oil prices averaged $3.36 per barrel more than WTI prices in 2017 compared with just $0.40 per barrel more in 2016, providing a price incentive to export USA crude oil into the global market", said Matt Stanley, a fuel broker at Freight Investor Services worldwide in a note. WTI CLc1 settled at $65.88 a barrel, up $1.58, or 2.5 percent.
Some say US producers are holding back expansion in order to prevent another price crash, as seen between 2014 and 2016.
"There are a number of bullish things to hang the hat of the rally on this week; be it the inventory report. or the tariff news, or the heightened tensions between Saudi and Iran", said Matt Smith, director of commodity research at Clipper Data in Louisville, Kentucky. Concerns that Trump could pull out of the Iran nuclear deal also had a positive effect on prices.
FILE PHOTO: A natural gas flare on an oil well pad burns as the sun sets outside Watford City, North Dakota January 21, 2016.
"Fears of a trade tit-for-tat with China is a component to oil's weakness today insofar as it might impact accelerating demand", said Anthony Headrick, energy market analyst and commodity futures broker at CHS Hedging LLC in Inver Grove Heights, Minnesota.
On a simple supply versus demand basis, however, global oil markets are facing the risk of returning into oversupply after being in a slight deficit for much of past year.
US production growth has partly been countered by the deal to cut output by the Organization of the Petroleum Exporting Countries, Russia and their allies. That brought the total number of rigs to 804, the highest in three years.
USA output is now higher than that of top exporter Saudi Arabia. Saudi Energy Minister Khalid al-Falih told Reuters the curbs, instituted in January 2017, would need to continue into 2019 to reduce global inventories.
Also looming over oil markets has been surging U.S. crude oil production, which has risen by more than 20% since mid-2016, to 10.38-million barrels a day, pushing it past top exporter Saudi Arabia.
"As the fundamental picture continues to tighten, that's going to attract further length in the market", he said.
"As the Saudi guessing game for the new rebalancing target begins, Brent seems well positioned to have another crack at the $70 (a barrel) level", PVM said in a note.