TOKYO: Oil prices rose for a fourth day on Tuesday on optimism the U.S. Federal Reserve will this week cut interest rates for the first time in more than 10 years, supporting fuel demand growth in the world’s biggest oil user.
Brent crude rose 46 cents, or 0.7%, to $64.17 a barrel by 0651 GMT, after gaining 0.4% the previous session.
U.S. crude was up 41 cents or 0.7%, at $57.28 a barrel, having risen 1.2% on Monday.
Lower U.S. interest rates would “support a continuation in global expansionary activities and fuel demand growth” for the second half of 2019, Benjamin Lu, an analyst at Phillip Futures in Singapore, said in a note.
“If the Fed is a little more dovish and prices in a 75 basis points cut … we might see oil pushing up towards $60,” Lu said by phone, referring to U.S. crude.
Still, “demand side concerns are the shadow over oil prices,” he added.
U.S. central bankers will begin their two-day meeting later on Tuesday and are expected to lower borrowing costs for the first time since the depths of the financial crisis more than a decade ago.
U.S. President Donald Trump said a small rate cut “is not enough.”
Economic growth in the United States 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.
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 the Group of 20 meeting last month.
However, expectations for progress during the two-day Shanghai meeting are low, so officials and businesses are hoping Washington and Beijing can at least detail commitments for “goodwill” gestures and clear the path for future negotiations.
Supply risks are still a concern as tensions remained high around the Strait of Hormuz, through which about a fifth of the world’s oil passes.
Tensions spiked between Iran and the West after Iranian commandos seized a British-flagged oil tanker in the Gulf this month in apparent retaliation for the capture of an Iranian tanker by British forces near Gibraltar.