Oil prices rose on Wednesday, hitting their highest this year, on hopes that the market will balance later this year.
Crude futures were helped by output cuts from top producers, as well as U.S. sanctions on OPEC members Iran and Venezuela. Prices were also supported by strong equity markets after signs of progress in trade talks between the United States and China.
U.S. President Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1, when tariffs on $200 billion worth of Chinese imports are scheduled to rise to 25 percent from 10 percent.
Brent crude futures rose 63 cents, or 1 percent, to $67.08 a barrel around 2:30 p.m. ET. The international benchmark rose as high as $67.38 on Wednesday, surpassing Monday's high for the year of $66.83.
U.S. West Texas Intermediate crude futures ended Wednesday's session 83 cents higher at $56.92 a barrel, posting a 1.5 percent gain and the best close since Nov. 12. WTI earlier hit $57.55, a new intraday high going back to Nov. 16.
"The oil market is supported by the OPEC and non-OPEC cuts from countries that are determined to see higher prices and supply disruptions," said Andy Lipow, president of Lipow Oil Associates in Houston.
The Organization of the Petroleum Exporting Countries and other producers, including Russia — an alliance known as OPEC+ — agreed to reduce oil supply by 1.2 million barrels per day from Jan. 1 this year.
Nigeria is willing to reduce oil output to help secure higher prices, the spokesman for President Muhammadu Buhari said in a statement on Wednesday, after an envoy from Saudi Arabia called on the African nation to adhere to a deal on production cuts.
In January, Nigeria pumped well above the quota it previously agreed to. Nigeria is Africa's largest oil producer.
Saudi Energy Minister Khalid al-Falih said on Wednesday he hoped the oil market would be balanced by April and that there would be no gap in supplies due to U.S. sanctions on OPEC members Iran and Venezuela.
"You could take that as a signal that Saudi Arabia will continue to take a proactive approach," Lipow said.
U.S. sanctions on the energy sectors of Iran and Venezuela have helped to reduce the availability of the kind of crude oil that yields more valuable middle distillates, such as jet fuel and diesel, rather than cheaper fuels, such as gasoline.
Despite the restrictions, Iran's crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship tracking data.
Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November, although it was much below the peak 2.5 million bpd reached mid-2018.
Barclays said U.S. sanctions meant that "although there is no lack of resources, there is an increasing lack of access to them".
However, price gains were capped as those supply disruptions were offset by expectations of inventory builds in the United States amid surging shale production to record highs.
U.S. crude stockpiles were expected to have risen by 3.1 million barrels last week, the fifth consecutive weekly build, a preliminary Reuters poll showed on Tuesday.
Weekly U.S inventory data is delayed by a day due to the Presidents Day holiday on Monday. The American Petroleum Institute will release its data at 4:30 p.m. EST (2130 GMT), while the Energy Information Administration report is due on Thursday at 11 a.m. EST (1600 GMT).
The EIA said on Tuesday shale production alone will hit a record 8.4 million bpd next month, suggesting little chance of a near-term slowdown in overall U.S. crude output.
BNP Paribas said surging U.S. output would feed into lower oil prices towards the end of the year, with Brent to dip to an average of $67 by the fourth quarter and WTI to average $61.
"U.S. oil production growth, driven by shale, will be increasingly exported in greater volumes to international markets while the global economy is expected to witness a synchronised slowdown in growth," the bank said.
— CNBC's Tom DiChristopher contributed to this report.