Brent crude futures (BZ=F) were up 1.5%, to trade at $63.07 a barrel, while West Texas Intermediate futures (CL=F) climbed 1.7%, hitting $60.12 a barrel.
The talks are due to take place in Switzerland on Saturday and Sunday, it was announced on Tuesday. On the US side, the talks will be led by Treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer, while China be respresented by by vice premier He Lifeng.
Bessent said in an interview on Fox News on Tuesday that the talks would focus on de-escalation rather than a major trade deal.
"We’ve got to de-escalate before we move forward,” he said. “We don’t want to decouple, what we want is fair trade."
Meanwhile, in a statement released after the talks were announced, China's ministry of commerce called on the US to "show sincerity" in the talks.
Escalating trade tensions between the US and China, as well as comments around broader tariffs by US president Donald Trump, have fuelled further volatility in markets over investor concerns that this could lead to an economic slowdown. Fears around the impact of a recession on fuel demand have weighed on prices.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Oil prices have continued to rise amid some hopes of a rapprochement with China and the US. There are also signs of weaker production in the United States which has helped brent crude, the benchmark, make fresh gains. Analysis from Diamondback Energy estimates that the number of rigs operating in the US is expected to be around 10% lower in the second quarter."
The pound dipped 0.2% against the dollar (GBPUSD=X) to trade at $1.3351 at the time of writing, as investors braced for the US Federal Reserve's interest rate decision later on Wednesday.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was up 0.2% to 99.46 in early European trading.
"The Fed is widely expected to keep rates on hold due to the unpredictability of US trade policy, despite calls from Trump for cuts," said Streeter. "The US economy contracted on an annual basis in the first quarter, but it was partly due to erratic buying behaviour, with imports surging as businesses stockpiled in a defensive move to try to minimise the worst of the initial wave of tariffs."
"Fed policymakers are likely to need more clarity about where tariff policy will land and its impact on employment and inflation before easing policy," she added.
"With the UK caught in the downdraft of Trump’s fiery trade policy, Bank of England policymakers look highly likely to cut interest rates," said Streeter. "The turmoil Trump has unleashed has increased the odds of an interest rate cut this week dramatically.
She said that markets are currently pricing in a 90% chance of a reduction, which was looking more like a 50% chance before "Liberation Day" on 2 April, when Trump announced sweeping tariffs.
"Growth forecasts have been slashed for the UK and the mighty services sector has contracted for the first time in 18 months, so policymakers look set to be ready with bandages to stop a further seeping away of activity," said Streeter.
In other currency moves, the pound edged lower against the euro (GBPEUR=X), down 0.1% to trade at €1.1743 at the time of writing.
Online gold investment service BullionVault said in note on Tuesday that the latest run of record gold prices had seen the most new investors in more than four years in April but also spurred the heaviest profit-taking, net of demand, in more than 12 months on its marketplace.
Adrian Ash, director of research at BullionVault, said: "While Trump's chaotic return to the White House has spurred a new wave of investors buying gold for the first time, the record gold prices which his policies have prompted are meeting heavy profit-taking from existing owners."
"That includes investors who first bought gold earlier this year, seizing a quick profit as the surge in prices trumps longer-term fears over the impact of Trump's policies."
More broadly, the FTSE 100 (^FTSE) dipped 0.3% to 8,570.33 on Wednesday morning. For more details, check our live coverage here.
