Oil prices have risen after China restarted monetary policy easing, raising expectations for higher fuel demand from the country.

Benchmark Brent crude futures rose 3 cents at $36.59 a barrel, while the US crude futures increased 20 cents and traded at $33.96 a barrel.

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China’s announcement to reduce the amount of cash held by banks as reserves are set to free-up around $100bn for fresh lending and came as a surprise to markets.

"This move will guide the smooth and moderate growth of credit supply and create a good monetary environment for structural reform."

The People’s Bank of China (PBOC) said that the reserve requirement ratio (RRR) would be reduced by 0.5% to 16.5%.

Financial Review quoted the central bank as saying: "This move will guide the smooth and moderate growth of credit supply and create a good monetary environment for structural reform."

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During February, exports from Iraq’s southern fields fell to an average of 3.225 million barrels per day (bpd).

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Data released by the US Government this week highlighted a fall in crude output in December 2015 by 43,000bpd to 9.26 million bpd.

A proposal by major oil producers, including Saudi Arabia and Russia to freeze output at January levels is unlikely to reduce a global overhang, according to analysts.