Oil prices rose about 3 percent on Tuesday, along with world stock markets, supported by China's plan to introduce policies to stabilize a slowing economy, reversing the previous session's losses due to grim data in the world's second-largest economy.
Crude prices fell more than 2 percent on Monday after data showed weakening imports and exports in China, raising new worries about a global slowdown.
But on Tuesday, China's National Development and Reform Commission offered some support, signaling it might roll out more fiscal stimulus. This countered negative sentiment from Monday when crude prices fell more than 2 percent after data showed weakening imports and exports in China.
"Some of the fears about the economic slowdown in 2019 seem to have ebbed away," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. "The market is latching on to news that suggests that the economy may be better than thought."
Output cuts from the OPEC and other producers, including Russia, also have begun to reduce fears of oversupply. The group known as OPEC+ agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut.
The bloc and its allies set a meeting for March 17 to 18 to monitor implementation of their pact, sources told Reuters, and another on April 17 to 18 on whether to extend cuts beyond the agreed six months.
Further support has come from data showing the number of U.S. rigs drilling for new oil dipped slightly to 873 in early 2019, and a Reuters poll on Monday found that U.S. crude oil stockpiles were likely to have fallen last week.
The rig data could signal a slowing of the swift rise in output from the United States, which became the world's top oil producer in 2018.
But analysts said a price recovery may be short-lived, as a darkening economic outlook could dampen growth in fuel demand.
"Any price rally is unlikely to be sustainable in the first half of the year simply because the demand for OPEC's oil is expected to be lower than the projected output from the organization," PVM Oil Associates strategist Tamas Varga said.
Such positive signals and hopes for renewed U.S.-China talks to resolve trade tensions have boosted world stock markets and oil prices, but fears about global growth weigh heavily.
"It would seem that the market is having a rather hard time making up its mind as to which story to believe in," consultancy JBC Energy said.