Oil prices inched up in Asian trade on Monday, supported by a weaker dollar as investors anticipated an interest rate cut from the Federal Reserve later this week. However, concerns over slowing demand, exacerbated by disappointing economic data from China, and increased U.S. production due to Hurricane Francine’s impact, limited gains.
Market holidays in China and Japan also contributed to lower trading volumes. WTI crude oil for November delivery rose 0.2% to $71.75 a barrel, while Brent crude rose 0.3% to $67.94 a barrel by 21:40 ET (01:40 GMT).
Focus on Fed Rate Cuts
A softer dollar provided support for oil prices, with markets anticipating a rate cut from the Fed on Wednesday. The central bank is expected to initiate an easing cycle, but there is uncertainty over whether it will be a 25 or 50 basis point cut. Lower rates could stimulate economic growth and maintain U.S. fuel demand in the coming months.
Disappointing Chinese Economic Data
Chinese economic data released over the weekend indicated further economic weakness in the largest oil importer. Industrial production and retail sales both missed expectations, while fixed asset investment rose and GDP growth fell. Concerns over slowing economic growth in China could reduce its demand for crude oil.
Analysts predict that Beijing may introduce more stimulus measures to support local economic growth, but GDP is still expected to fall below the government’s 5% target in the third quarter. Both OPEC and the IEA have lowered their outlook for oil demand growth this year due to concerns over China’s economy.
Last week, oil prices neared three-year lows following these developments, although they experienced a slight rebound.