Crude oil prices rose Tuesday, on track to close at a two-week high, on optimism the U.S. Federal Reserve will cut interest rates this week for the first time in more than 10 years, boosting demand expectations in the world’s biggest oil user.
Meanwhile, ahead of weekly data, crude oil inventories in the U.S. were also forecast to have dropped for a seventh straight week, Kallanish Energy reports.
Analysts also noted the market was up on optimism over the resumption of U.S.-China trade talks, which could boost oil demand around the world.
Front-month Brent crude for September delivery were up $1.27, or 2.0%, at $64.98 a barrel by 2:22 p.m. EDT, while U.S. West Texas Intermediate crude was up $1.40, or 2.5%, to $58.27/Bbl.
For the month, both contracts were still set to drop due to lingering worries about oil demand, with Brent down over 2% and WTI down almost 1%.
U.S. central bankers began their two-day meeting late Tuesday and were expected to lower borrowing costs for the first time since the days of the financial crisis more than 10 years ago.
Economic growth in the U.S. slowed less than expected in the second quarter, strengthening the outlook for oil consumption but, elsewhere, disappointing economic data has increased concerns about slower growth.
Other analysts said prices were up this week due to technical issues and expectations of bullish U.S. storage reports.
U.S. crude stockpiles were forecast to have dropped 2.6 million barrels last week, according to analysts in a Reuters poll.
If correct, that would put crude stocks down for a seventh week in a row for the first time since they fell for a record 10 weeks in a row in January 2018, according to Refinitiv, data going back to 1982.
U.S. and Chinese negotiators also meet this week for their first in-person talks since agreeing to a truce to their trade dispute at a Group of 20 meeting last month.
Supply risks are still a concern as tensions remained high around the Strait of Hormuz, through which about 20% of the world’s oil passes.
This post appeared first on Kallanish Energy News.