UPDATE 8-Oil rises 2% but traders brace for wild ride on U.S. Election Day

* Prices rally as financial markets recover
* Possible extension of oil output curbs supports prices
* Algeria supports a possible extension to OPEC+ oil supply
cuts
* Weaker dollar .DXY helps boost crude prices
* Italy and Norway to tighten COVID-19 restrictions
* Coming Up: U.S. oil stock data from API at 4:30 pm ET/2130
GMT

(Adds closing prices)
By Scott DiSavino
NEW YORK, Nov 3 (Reuters) - Oil prices rose near 2% on
Tuesday, advancing with other financial markets on U.S. Election
Day although traders were bracing for volatility depending on
the voting results and as surging coronavirus cases around the
world fed worries about fuel demand.
Brent LCOc1 futures rose 74 cents, or 1.9%, to settle at
$39.71 a barrel, while U.S. West Texas Intermediate (WTI) crude
CLc1 rose 85 cents, or 2.3%, to settle at $37.66.
The oil price moves came ahead of data expected to show U.S.
crude stockpiles rose 900,000 barrels last week after gaining
4.3 million barrels in the prior week. EIA/S API/S
ENERGYUSA ENERGYAPI
The American Petroleum Institute (API), an industry group,
will release its inventory report later Tuesday, ahead of
government data from the U.S. Energy Information Administration
(EIA) on Wednesday.
After a rancorous presidential campaign that exposed the
depth of the political divisions in the United States, Americans
streamed to the polls on Tuesday to choose either incumbent
Donald Trump or challenger Joe Biden to lead a pandemic-battered
nation for the next four years. "The election is dominating markets today. Crude oil is up
... The general feeling seems to be that the final outcome could
come as early as tomorrow," said Robert Yawger, director of
energy futures at Mizuho in New York, noting a Democratic sweep
could lead to a super-sized stimulus package that would be
positive for oil.
Major U.S. stock market indices traded higher, with the S&P
500 .SPX up 1.8%. .N
The U.S. dollar, meanwhile, dipped 0.6% against a basket of
currencies .DXY as risk appetite grew on bets that Biden will
win. /USD
A weaker dollar makes oil cheaper for holders of other
currencies, which traders said was helping to boost crude
prices.
The threat of additional lockdowns that could depress energy
demand capped oil price gains after Italy, Norway and Hungary
tightened COVID-19 restrictions. Oil prices, which dropped over 10% last week, got a reprieve
this week after OPEC member Algeria came out in support of
deferring a planned increase in OPEC+ oil output from January
and Russia's energy minister raised the possibility with the
country's oil companies. The Organization of the Petroleum Exporting Countries (OPEC)
and allies led by Russia, together known as OPEC+, are due to
taper cuts of 7.7 million barrels per day (bpd) by around 2
million bpd from January.
Sources said OPEC and Russia are considering deeper oil
output cuts early next year to try to strengthen the oil market.