UPDATE 9-Oil edges up on prospect of U.S. interest rate cut

* Fed expected to lower U.S. borrowing costs
* Expectations of progress in U.S.-China talks are low
* Slowing economic growth could hit oil demand
* Britain warns Iran: release seized tanker

(Adds settlement prices, updates market activity, adds analyst
comment)
By Stephanie Kelly
NEW YORK, July 29 (Reuters) - Oil prices rose on Monday as
the prospect of an expected interest rate cut by the U.S.
Federal Reserve overshadowed pessimism over U.S.-China trade
talks and worries about slower global economic growth.
Brent crude LCOc1 gained 25 cents to settle at $63.71 a
barrel, while U.S. West Texas Intermediate (WTI) crude CLc1
futures rose 67 cents to settle at $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
U.S. central bankers expected to lower borrowing costs for the
first time since the depths of the financial crisis more than a
decade ago. U.S. 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.
U.S. and Chinese negotiators meet this week for their first
in-person talks since a G20 truce last month, but expectations
are low after Trump said China might not want to sign a trade
deal until after the 2020 U.S. 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 U.S. sanctions at the start
of May, China's crude oil imports from Iran sank almost 60% in
June from a year earlier, Chinese customs data showed on
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Reuters Poll: 2019 economic growth forecast revisions https://tmsnrt.rs/2y9gT2M
TECHNICALS-U.S. oil may fall towards $55.26 L4N24U0OK
TECHNICALS-Brent oil may fall to $61.48 L4N24U0C8
U.S. Rig count png https://tmsnrt.rs/2X8Myf7
Trade tensions boost U.S. rate-cut expectations png https://tmsnrt.rs/2KdE2by
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