Investing.com-- Oil prices rose slightly in Asian trade on Monday, benefiting from a softer dollar as traders positioned for an interest rate cut by the Federal Reserve later this week.
But gains were capped by persistent concerns over slowing demand, especially following a slew of weaker-than-expected economic data from China over the weekend. U.S. production was also seen picking up from the impact of Hurricane Francine in the Gulf of Mexico.
Market holidays in China and Japan also kept trading volumes relatively slim.
Brent oil futures expiring in November rose 0.2% to $71.75 a barrel, while West Texas Intermediate crude futures rose 0.3% to $67.94 a barrel by 21:40 ET (01:40 GMT).
Rate cuts in focus as Fed meeting looms
A softer dollar was the biggest point of support for oil prices, as markets positioned for an interest rate cut from the Fed on Wednesday.
The central bank is likely to kick off an easing cycle, although traders are split over a 25 or 50 basis point cut.
Still, lower rates bode well for economic growth, which in turn could help keep U.S. fuel demand supported in the coming months.
Chinese economic data underwhelms
Chinese economic data released over the weekend pointed to more economic weakness in the world’s biggest oil importers.
Industrial production and retail sales both missed expectations, while unemployment rose and house prices fell.
The readings ramped up concerns that slowing economic growth in the world’s biggest oil importer will dent its appetite for crude.
Analysts at ANZ said Beijing was likely to roll out more stimulus measures to help support local economic growth, although they still expect gross domestic product to come below the government’s 5% target in the third quarter.
Concerns over China saw both the Organization of Petroleum Exporting Countries and the International Energy Agency slash their outlook for oil demand growth in the current year.
The move pulled oil prices to near three-year lows last week, although they did rebound marginally.