Brent crude futures for November increased 34 cents, or 0.5%, at $73.09 a barrel and U.S. crude futures for October jumped 49 cents, or 0.7%, at $70.58 a barrel
Oil prices extended gains on Tuesday as the market eyed U.S. output in the aftermath of Hurricane Francine and expectations of lower U.S. crude stockpiles.
Brent crude futures for November increased 34 cents, or 0.5%, at $73.09 a barrel at 0420 GMT. U.S. crude futures for October jumped 49 cents, or 0.7%, at $70.58 a barrel.
Both contracts settled higher in the previous session as the ongoing impact of Hurricane Francine on output in the U.S. Gulf of Mexico countered Chinese demand concerns ahead of this week’s U.S. Fed interest rate cut decision, which should prove positive for investor sentiment in oil.
More than 12% of crude production and 16% of natural gas output in the U.S. Gulf of Mexico remained offline, as per the U.S. Bureau of Safety and Environmental Enforcement on Monday.
Oil prices managed to recover slightly. An extreme bearish state over the past weeks called for some near-term stabilisation, with prices previously reaching their lowest level since 2021, according to Yeap Jun Rong, market strategist at IG.
But a weaker-than-expected run in China’s economic data lately could still be a source of caution, while the lead-up to the upcoming FOMC (Federal Open Market Committee) interest rate decision may limit some risk-taking, Yeap said.
The Federal Reserve is expected to start its easing cycle on Wednesday, with Fed funds futures showing markets are now pricing in a 69% possibility the central bank will reduce rates by 50 bps.
Growing expectations of an aggressive rate cut boosted sentiment across the commodities complex, ANZ analysts said in a note, adding that ongoing supply disruptions also supported oil markets.
A lower interest rate will cut the cost of borrowing and can potentially lift oil demand by supporting economic growth.
