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Oil edges up on prospect of US interest rate cut
[NEW YORK] Oil prices rose on Monday as the prospect of an expected interest rate cut by the US Federal Reserve overshadowed pessimism over US-China trade talks and worries about slower global economic growth.
Brent crude gained 25 cents to settle at US$63.71 a barrel, while US West Texas Intermediate (WTI) crude futures rose 67 cents to settle at US$56.87 a barrel.
"Prices appear to be treading water ahead of this week's events," said John Kilduff, partner at Again Capital Management.
Traders and investors are watching the Fed this week, with US central bankers expected to lower borrowing costs for the first time since the depths of the financial crisis more than a decade ago.
US President Donald Trump said a small Fed 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. Elsewhere, disappointing economic data has increased concerns about slower growth.
US and Chinese negotiators meet this week for their first in-person talks since a G-20 truce last month, but expectations are low after Trump said China might not want to sign a trade deal until after the 2020 US election.
"Today's kickoff to some renewed trade negotiations between U.S. and China will likely inspire some modest price support," Jim Ritterbusch of Ritterbusch and Associates said in a note. "However, the mid-week Fed decision and associated commentary could prove to be this week's larger driver of oil pricing."
Crude prices were also supported by supply risk as tensions remained high around the Strait of Hormuz, through which about a fifth of the world's oil passes.
Tensions have 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.
Britain told Iran that if it wants to "come out of the dark" it must follow international rules and release the British-flagged tanker.
Following the end of a waiver on US sanctions at the start of May, China's crude oil imports from Iran sank almost 60 per cent in June from a year earlier, Chinese customs data showed on Saturday.