Oil prices climbed on Wednesday as data showed a larger-than-expected decline in U.S. crude and fuel inventories last week, while news of upcoming talks between U.S. and Chinese leaders helped ease market tensions.

The benchmark West Texas Intermediate (WTI) crude contract on the New York Mercantile Exchange rose $0.33, or 0.55%, to settle at $60.48 per barrel. Brent crude futures gained $0.52, or 0.81%, closing at $64.92 per barrel.

According to the U.S. Energy Information Administration's Wednesday report, U.S. crude, gasoline, and distillate stockpiles all fell more than analysts had anticipated. Crude inventories dropped by nearly 7 million barrels, far exceeding the modest expected draw of 211,000 barrels. This sharp decline forced markets to reassess expectations of a looming oil glut—despite OPEC+ increasing output and U.S. production remaining at record levels.

"Where is the surplus?" said Phil Flynn, an analyst at Price Group, following the report. "The longer it doesn't appear, the more we question whether it exists at all."

U.S. President Donald Trump predicted positive outcomes from his meeting with Chinese leadership, scheduled for Thursday during a summit in South Korea. The same summit also saw the U.S. and South Korea finalize details of a closely watched trade agreement.

Optimism surrounding the U.S.-China talks and the U.S.-South Korea deal may help alleviate concerns that Trump's tariffs and trade wars could lead to an economic slowdown—factors that have recently fueled worries over oil demand and weighed on commodity prices.

Both Brent and WTI crude posted their largest weekly gains since June last week after Trump imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting major oil firms including Lukoil and Rosneft.

However, doubts over whether sanctions can offset oversupply, along with discussions of further OPEC+ production increases, continued to pressure oil prices. Both benchmarks fell 1.9% (over $1) in the previous session.

Four sources familiar with discussions said OPEC+, the world's largest oil producer alliance, is leaning toward a modest output hike in December, with two sources mentioning a potential additional 137,000 barrels per day.