09:11 AM EDT, 05/07/2025 (MT Newswires) -- Oil traded higher for a second day early on Wednesday, rebounding from a four-year low touched Monday as China and the United States agreed to stage trade talks while a report showed U.S. inventories fell last week.

West Texas Intermediate crude oil for June delivery was last seen up US$0.42 to US$59.51 per barrel, while July Brent crude was up US$0.39 to US$62.54.

Prices on Monday fell to the lowest since February 2021 after OPEC+ said it plans to add a second monthly supply increase of 411,000 barrels per day in June as it looks to speed the return of 2.2-million bpd of voluntary production cuts and punish cartel members producing above their quotas.

"The move, largely driven by Saudi Arabia, appears to be a calculated response to persistent non-compliance within the group-particularly from Kazakhstan-and also aligns with former President Trump's push for lower oil prices. Over time, OPEC could benefit from this strategy through increased market share, as sustained low prices may challenge the economic viability of higher-cost producers," Ole Hansen, head of commodity strategy at Saxo Bank, wrote.

With the market pricing in the supply hike by cutting oil prices 12% from the month high of US$64.68 on April 17 to Monday's low of US$57.13, traders were ready to bid oil on good news. That came as the United States and China said they plan to stage talks to end their trade war following U.S. President Donald Trump's imposition of 145% tariffs on imports from China last month, while China retaliated with punishing tariffs on U.S. goods, nearly ending all trade between the world's two largest economies.

"Markets this morning, including oil, are cock-a-hoop that the US and China are to finally meet in Geneva this weekend and after a relief rally yesterday by oil from year-to-date lows, expectancy of ice-breaking talks takes up the baton of hope for the moment," PVM Oil Associates noted.

A sharp drop in U.S. oil inventories last week also supported oil prices. In its weekly survey, the American Petroleum Institute reported inventories fell by 4.49-million barrels last week, while analysts polled by Oilprice.com expected a draw of 2.5-million barrels on average. The Energy Information Administration will release official inventory data later on Wednesday morning.