Oil rallies as U.S. again sanctions ...

Oil ended above $56 a barrel Wednesday after the U.S. announced plans to intensify sanctions on Iran and Russia said it would trim production in September.

Futures in New York gained 4.2% as Brian Hook, Washington’s special representative to Iran, said the U.S. will add “maximum pressure” to its Iran campaign. Russia’s energy minister Alexander Novak said his country’s monthly oil output would fall in September, according to Interfax.

“Oil prices are recovering from the sell-off the last few days,” with additional help from predictions for another drawdown in U.S. crude inventories and comments on Russia’s production this month, according to Leo Mariani, an analyst at KeyBanc Capital Markets.

Oil advanced alongside U.S. stocks as political tensions appeared to subside in Hong Kong and the U.K. while indicators in China and Europe hinted global economic growth may not be as bad as some expected.

Also, the industry is expecting yet another draw in weekly American crude inventories with estimates as large as 6.3 million barrels. “Any kind of draw would be good,” as this would mean last week’s decline wasn’t a one-week event, according to Jan Stuart, global energy economist at Cornerstone Macro LLC.

The industry-funded American Petroleum Institute will be releasing its weekly petroleum inventory report later Wednesday, while the government’s Energy Information Administration will be issuing its data Thursday; both data were delayed a day because of the Labor Day holiday.

Crude has fallen about 20% from a year ago as the trade war escalated and its toll on the global economy became more apparent despite output curbs by the Organization of Petroleum Exporting Countries and its allies.

Yet, demand concerns emanating from the intensifying U.S.-China trade war won’t be abating anytime soon and that will keep weighing on the market.

“Right now, the market isn’t only following fundamentals. It’s very perceptive to the ongoing trade war,” and that’s affecting demand, said Paola Rodriguez-Masiu, an analyst at Rystad Energy. “You can’t discard the possibility that China and the U.S. will continue to raise the levies again,” she added.

WTI for October delivery settled up $2.32 to $56.26 a barrel on the New York Mercantile Exchange in New York after rising as much as 4.9% earlier in the day. The Brent November contract added $2.44 to $60.70 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a $4.60 premium to WTI for the same month.

In broader markets, U.S. equity-index futures rallied alongside European and Asian stocks on Wednesday as traders cheered a easing in political tensions from Rome and London to Hong Kong. Treasuries and gold retreated, while the dollar slipped.