By Amanda Cooper
LONDON (Reuters) - Oil rose on Monday, lifted by a rally across stocks and other commodities, after the United States said it had put a possible trade war with China "on hold".
Brent crude futures were up 35 cents at $78.86 a barrel at 0845 GMT, having hit a high above $80 last week, while U.S. West Texas Intermediate (WTI) crude futures rose 29 cents to $71.57 a barrel.
A possible U.S. trade war with China is "on hold" after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving global markets a lift in early trading on Monday.
"That's the main thing that's driven oil and equity futures. It does for now, in terms of trade wars, put that risk away," Petromatrix strategist Olivier Jakob said.
The energy ministers of Saudi Arabia and the United Arab Emirates last week voiced concern about recent oil market volatility and plan to meet Russian counterpart Alexander Novak in St Petersburg to continue consultations.
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"It's worth watching St Petersburg at the end of this week, that could provide the key input for the next few weeks," Jakob said.
Saudi Arabian minister of energy Khalid al-Falih and the UAE's Suhail al-Mazroui will attend the St Petersburg Economic Forum this week, along with OPEC Secretary General Mohammad Barkindo and corporate heavyweights Bob Dudley and Ben van Beurden, the chief executives of BP and Royal Dutch Shell, respectively.
BP's Dudley told Reuters he expected a flood of U.S. shale and a possible reopening of OPEC taps to cool oil markets after crude rose above $80 a barrel last week.
Dudley said he saw oil prices falling to between $50 and $65 a barrel due to surging shale output and OPEC's capacity to boost production to replace potential falls in Iranian supplies due to sanctions.
Oil prices are within sight of last week's November 2014 highs, but many traders and analysts say they believe there is enough supply to meet demand despite ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC), plunging output in crisis-struck Venezuela and looming U.S. sanctions against major oil producer Iran.
"Without a further escalation in geopolitical risk, oil might be due a pullback," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Fund managers cut their holdings of U.S. crude to the lowest level this year, according to the most recent data from the U.S. Commodity Futures Trading Commission on Friday. [CFTC/]
(Reporting by Henning Gloystein; Editing by Richard Pullin and Mark Potter)