Oil prices rise as rate cut hopes offset demand fears Investing.com

Investing.com– Oil prices rose slightly in Asian trade on Monday, benefiting from a weaker dollar as traders braced for an interest rate cut by the Federal Reserve later this week.

But gains were limited by lingering concerns about slowing demand, particularly after a series of weaker-than-expected economic data from China over the weekend. US production was also seen rising following the impact of Hurricane Francine in the Gulf of Mexico.

Holidays in China and Japan also kept trading volumes relatively thin.

U.S. crude that expires in November rose 0.2 percent to $71.75 a barrel, while it rose 0.3 percent to $67.94 a barrel by 9:40 p.m. ET (01:40 GMT).

Rate cuts gather pace as Fed meeting approaches

A weaker one was the biggest support for oil prices as markets positioned themselves for one from the Fed on Wednesday.

The central bank is likely to begin an easing cycle, although traders are divided on a 25 or 50 basis point cut.

Still, the lower rates bode well for economic growth, which in turn could help keep U.S. fuel demand buoyant in the coming months.

Chinese economic data is disappointing

Chinese economic data released over the weekend indicated further economic weakness in the world’s biggest oil importers.

and both missed expectations as they rose and fell.

The readings raised concerns that slowing economic growth in the world’s biggest oil importer will dampen its appetite for crude.

Analysts at ANZ said Beijing was likely to implement more stimulus measures to support local economic growth, although gross domestic product was still expected to fall below the government’s target of 5 percent in the third quarter.

Concerns about China prompted both the Organization of the Petroleum Exporting Countries and the International Energy Agency to cut their outlook for oil demand growth this year.

The move sent oil prices to three-year lows last week, although they have rebounded marginally.