Picture: Reuters
Picture: Reuters

London — Oil prices were up on Monday, buoyed by hopes of progress in US-China trade talks and supported by challenges to supply facing major exporters.

Brent crude rose 34 US cents or 0.6% to $58.71 a barrel by 8.40am GMT, while US West Texas Intermediate (WTI) crude was at $53.16, up 35c or 0.7%.

Both futures contracts ended last week with a more than 5% decline after dismal manufacturing data from the US and China, with the trade row between the world's top economies undermining global economic prospects.

US and Chinese officials meet in Washington on October 10-11 in a fresh effort to work out a deal.

On the supply side, deadly antigovernment unrest has gripped Iraq, the second-largest producer among Opec.

Iraq's oil exports of 3.43-million barrels per day (bpd) from Basra terminals could be disrupted if instability lasts for weeks, Ayham Kamel, Eurasia Group's practice head for Middle East and North Africa, said in a note.

“Any oil production disruption would occur at a time when Saudi Arabia has lost a significant part of its energy system redundancies [spare capacity]," he said.

The major Buzzard oil field in the British North Sea was also shut for pipe repair work, China's CNOOC said on Friday.

Libya's National Oil Corporation (NOC) said on Sunday it would close the Faregh oil field at Zueitina port for scheduled maintenance from Monday until October 14.

But analysts said the resumption in Saudi Arabian production after the September attacks could undermine a price rally.

“The Saudi attacks have quickly been forgotten about and global growth is back to being the main driver of oil markets,” Oanda senior market analyst Craig Erlam said.

“Such complacency could come back to bite oil traders as another aggressive spike will likely accompany any further escalation in the region.”

Despite Monday's gains, Brent is still down more than 20% from the 2019 peak of $75.60 a barrel recorded in April.

But Opec secretary-general Mohammed Barkindo said it was still too early for the group to discuss deeper oil output cuts to support prices, Russian news agency TASS reported on Monday.

Reuters