Crude prices rose nearly 2 percent on Wednesday, with Brent hitting its highest this year, on hopes that oil markets will balance later this year, helped by output cuts from top producers as well as US 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.

US 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 futures were up 77 cents, or 1.2 percent, at $67.22 a barrel by 12:12 p.m. EST (1712 GMT), after hitting a 2019 high of $67.34.

US West Texas Intermediate crude (WTI) for delivery in March were at $57.12 a barrel, up $1.03, or 1.8 percent, ahead of the contract's expiry. The more active April contract was up $1.01 at $57.46.

"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.

Saudi Energy Minister Khalid al-Falih said 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 Iran and Venezuela.

"You could take that as a signal that Saudi Arabia will continue to take a proactive approach," Lipow said.

US 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 US sanctions last November, although it was much below the peak 2.5 million bpd reached mid-2018.

Barclays said US 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.

US 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 US 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 US 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.

"US 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.