NEW YORK (Reuters) – Oil prices rose about 2% to a two-week high on Tuesday 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.
FILE PHOTO: A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo
Meanwhile, ahead of weekly data, crude oil inventories in the United States were forecast to have dropped for a seventh straight week.
On its second-to-last day as the front-month contract, Brent LCOc1 futures for September delivery gained $1.01, or 1.6%, to settle at $64.72 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained $1.18, or 2.1%, to settle at $58.05.
That put both contracts up for a fourth day in a row to their highest closes since July 15.
For the month, however, both contracts were still set to decline due to lingering worries about oil demand with Brent down over 2% and WTI down less than 1%.
U.S. crude futures for delivery in December 2019 CLZ9 traded near the biggest premium to futures for delivery in December 2020 CLZ9-Z0 in about two months at $3.15 a barrel. Oil producers have been selling the back end of the curve as they hedge future output, leading to the spread widening, traders and brokers said.
“Crude oil moved higher today partly due to anticipation of another meaningful inventory draw this week along with tensions that remain escalated in the Strait of Hormuz,” said Brian Kessens, senior portfolio manager at energy investment manager Tortoise, noting “the prospect of lower rates and U.S.-China trade talks are buoying economic prospects.”