Sept 17 (Askume) – Oil prices rose in volatile trade on Tuesday as attention turned to the Federal Reserve policy meeting scheduled to conclude on Wednesday, while gains were capped by concerns about weak demand from China.
The prospect of a drawdown in US crude oil inventories and concerns about US production after Hurricane Francine provided some support to prices.
November Brent crude futures were up 12 cents, or 0.16%, at $72.87 a barrel at 1153 GMT. October U.S. crude futures rose 27 cents, or 0.39%, to $70.36 a barrel.
The prices fell 0.79% and 0.68% in the first session.
Li Jing Gan, financial market strategist at Exness, said oil prices continue to fluctuate as traders assess the dynamics of supply and demand.
“In addition, oil prices may face further volatility as the market is uncertain about the extent of the Federal Reserve’s decision to cut interest rates on Wednesday,” Gan said.
China’s refinery output fell for a fifth straight month in August amid sluggish fuel demand and weak export profits, government data showed on Saturday.
Both contracts ended higher in the previous session as output remained constrained. The US Bureau of Safety and Environmental Enforcement (BSEE) said on Monday thatMore than 12% of crude oil production in the US Gulf and more than 16% of natural gas production in the Gulf of Mexico is offline due to the effects of Hurricane Francine .
Charalampos Pissoros, a senior investment analyst at the brokerage firm, expects a decline in crude oil inventories.
“Having said that, prices are pulling back today, probably as participants view the above developments as temporary changes in the oil equation and are concerned about weaker global demand, especially from China.”
In the United States, the Federal Reserve is expected to begin its easing cycle on Wednesday, and federal funds futures show that the market is currently pricing in a 69% chance of a 50 basis point interest rate cut.
Lower interest rates will reduce borrowing costs and potentially boost oil demand by supporting economic growth.
Investors are also paying attention to an expected drop in US crude oil inventories. According to a Askume survey, US crude oil inventories may have fallen by about 200,000 barrels in the week ending September 13.
