WASHINGTON (dpa-AFX) - Oil prices climbed higher on Tuesday as concerns about tight supply in the market offset continued uncertainty about the outlook for demand from China.
Optimism about an interest rate cut by the Federal Reserve on Wednesday, and possibility of more reductions in the coming months, contributed as well to the rise in oil prices.
CME Group's FedWatch Tool is currently indicating a 61% chance of a half point rate cut and a 39% chance of a quarter point rate cut.
Irrespective of the size of the cut on Wednesday, the Fed is still expected to continue lowering rates over the remainder of the year.
West Texas Intermediate Crude oil futures for October ended higher by $1.10 or about 1.5% at $71.19 a barrel.
Brent crude futures were up $1.11 or about 1.53% at $73.86 a barrel a little while ago.
Also concerns about supply disruptions persist, the Bureau of Safety and Environmental Enforcement (BSEE) said that just about 12% of crude production remained offline in the U.S. Gulf of Mexico, compared to over 40% shut-in at the peak when Hurricane Francine made landfall.
Exxon Mobil said on Monday it was working to safely restart operations at its Hoover offshore platform in the Gulf. Chevron also redeployed all personnel to their Gulf facilities and resumed production.
The unexpected slight uptick in U.S. retail sales in the month of August contributed a bit to oil prices. The Commerce Department said retail sales inched up by 0.1% in August after surging by an upwardly revised 1.1% in July.
The uptick surprised economists, who had expected retail sales to dip by 0.2% compared to the 1% jump originally reported for the previous month.
Markets now await weekly oil reports from the American Petroleum Institute (API) - due later today, and the U.S. Energy Information Administration (EIA) - due Wednesday morning.
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