Investing.com-- Oil prices saw a slight increase in Asian trade on Tuesday, gaining support from the possibility of interest rate cuts and supply disruptions caused by Hurricane Francine.
However, concerns over slowing demand, particularly in China, limited the gains in crude. The price of WTI crude expiring in November rose 0.2% to $72.88 a barrel, while Brent crude rose 0.3% to $69.24 a barrel by 21:07 ET (01:07 GMT).
Supply Disruptions from Hurricane Francine Still Impacting Oil Production
U.S. authorities reported that more than 12% of crude production and 16% of natural gas output in the Gulf of Mexico were still offline following the impact of Hurricane Francine. While this led to tighter supplies in the country, oil producers have been working to bring production back online as the hurricane weakens.
Fed Meeting and Interest Rate Cut in Focus
All eyes are on the Federal Reserve's meeting on Wednesday, where a cut in interest rates is widely expected. Speculation about a 50 basis point cut has been growing, with the Fed likely to start an easing cycle from Wednesday. This anticipation weighed on the U.S. dollar, benefiting oil prices. Lower interest rates could also boost oil demand by supporting economic growth.
Fears of Slowing Demand Limit Oil's Upside
Despite the positive factors, concerns over slowing demand, especially in China, have been holding back further gains in oil prices. Weak economic data and fears of a renewed trade war between China and the West have added to the uncertainty, causing organizations like OPEC and the IEA to lower their demand outlook for the coming years.
Overall, the combination of supply disruptions, interest rate cuts, and demand fears are influencing oil prices in the market. Investors should keep a close eye on these factors to make informed decisions about their investments in the oil sector.