Oil prices jumped to a three-month high on Feb. 18, as hopes for a U.S.-China trade deal added to the optimism sparked by news that Saudi Arabia was cutting production more aggressively than expected.

After tumbling more than 30% in the fourth quarter, Brent crude, the international benchmark, has bounced by more than a fifth this year in tandem with the wider rebound in equities. Some of the renewed optimism has been stirred by hopes that Washington and Beijing will avoid an escalation in trade tariffs.

“[The oil price] is finding tailwind from generally positive market sentiment associated with optimism about the continuation of trade talks between the U.S. and China,” said Carsten Fritsch, a strategist at Commerzbank. Talks between American and Chinese officials are expected to continue this week.

The strength of this year’s oil recovery is encouraging money managers, whipsawed by the brutal fall in the fourth quarter, to become a little more bullish. Net long positions—the difference between bets on rising and falling prices—jumped by 32,062 contracts in the week to Feb. 12. This is the equivalent of more than 32m barrels of futures and options. Brent rose 0.2%  to $66.37 on Feb. 18.

Saudi Arabia’s disclosure last week that it planned to make deeper than expected cuts to production injected further momentum into the rally. The kingdom said it would cut production to about 9.8m barrels a day in March, more than 500,000 bbl/d below its pledged target under the deal agreed with global producers, Saudi energy minister Khalid Al Falih told the Financial Times last week.

“We just happened to have created a situation where there’s an oversupply, and inventories have veered off from the range we brought them to in the first half of 2018,” he said of market balances at the end of last year when prices dropped by 40%.

The decision by OPEC and allies including, Russia in December, to cut production was a sharp reversal from the push to boost supply in the middle of last year when U.S. President Donald Trump urged the cartel to tame rising prices.

Falih said the attempt to “calm” markets resulted in an “over exuberance” in unleashing more barrels on to the market. Still, he said, markets were now “coming back to normalcy”.

This year prices have also been lifted by U.S. sanctions attempting to curb Iran’s nuclear ambitions, and influence a leadership battle in Venezuela, which have squeezed crude supplies from both countries. The International Energy Agency said last week that the restrictions had choked off some heavier crude exports causing disruptions for some refiners, even as lighter supplies—such as from the U.S.—continued to grow.

Hopes for the trade deal and fewer OPEC barrels is proving enough for now to offset fears over swelling U.S. shale production. U.S. energy companies increased the number of rigs drilling for oil last week by three to 857, data from energy services company Baker Hughes said in its weekly report on Feb. 15. The U.S. energy department’s statistics arm said it expected US output to rise by nearly 1.5 MMbbl/d this year and 790,000 bbl/d next year, taking production to record levels of more than 1 MMbbl/d in 2020.

“At least in the short term it would seem that not much stands in the way of prices gunning for a test of $70,” said analysts at JBC Energy.