The tide appears to have turned for the world’s most-consumed edible oil.

Just five months ago, benchmark futures in Malaysia languished at four-year lows as investors fretted about stubbornly high stockpiles, waning demand from top buyers India and China and European restrictions that linked palm oil to environmental harm. Then in October, a trade spat between No. 2 producer Malaysia and India threatened to further hit sales and prices.

That all changed at an industry conference in Bali, where top analysts warned that dry weather and…