* Optimism over U.S.-China trade talks also supports prices
* POLL-U.S. crude stockpiles likely down for seventh
straight week
* Coming Up - U.S. weekly oil inventories from API at 2030
GMT
(Adds latest prices, December 2019 versus 2020 spread)
By Scott DiSavino
NEW YORK, July 30 (Reuters) - Oil prices rose about 2% to a
two-week high on Tuesday on optimism the U.S. Federal Reserve
will cut interest rates this week for the first time in more
than 10 years, boosting demand expectations in the world's
biggest oil user.
Meanwhile, ahead of weekly data, crude oil inventories in
the United States were forecast to have dropped for a seventh
straight week.
On its second-to-last day as the front-month contract, Brent
LCOc1 futures for September delivery gained $1.01, or 1.6%, to
settle at $64.72 a barrel, while U.S. West Texas Intermediate
(WTI) crude CLc1 gained $1.18, or 2.1%, to settle at $58.05.
That put both contracts up for a fourth day in a row to
their highest closes since July 15.
For the month, however, both contracts were still set to
decline due to lingering worries about oil demand with Brent
down over 2% and WTI down less than 1%.
U.S. crude futures for delivery in December 2019 CLZ9
traded near the biggest premium to futures for delivery in
December 2020 CLZ9-Z0 in about two months at $3.15 a barrel.
Oil producers have been selling the back end of the curve as
they hedge future output, leading to the spread widening,
traders and brokers said.
"Crude oil moved higher today partly due to anticipation of
another meaningful inventory draw this week along with tensions
that remain escalated in the Strait of Hormuz," said Brian
Kessens, senior portfolio manager at energy investment manager
Tortoise, noting "the prospect of lower rates and U.S.-China
trade talks are buoying economic prospects."
U.S. central bankers began their two-day meeting on Tuesday
and were expected to lower borrowing costs for the first time
since the depths of the financial crisis more than a decade ago.
"Regarding the Fed, the market has priced in a 25
basis-point cut for Wednesday," Harry Tchilinguirian, global oil
strategist at BNP Paribas in London, told the Reuters Global Oil
Forum.
U.S. President Donald Trump called on the Federal Reserve to
make a large interest rate cut, saying he was disappointed in
the central bank and that it had put him at a disadvantage by
not acting sooner. Economic growth in the United States slowed less than
expected in the second quarter, strengthening the outlook for
oil consumption, but elsewhere, disappointing economic data has
increased concerns about slower growth.
In the United States, analysts forecast crude stockpiles
dropped by 2.6 million barrels last week, according to a Reuters
poll. The American Petroleum Institute (API), an industry group,
is due to release its inventory report at 4:30 p.m. EDT (2030
GMT), followed by U.S. government data on Wednesday morning.
EIA/S
If correct, that decline would put crude stocks down for a
seventh week in a row for the first time since they fell for a
record 10 consecutive weeks in January 2018, according to
Refinitiv data going back to 1982. Total crude stockpiles,
however, would still be about 3% over the five-year (2014-2018)
average for this time of year. USOILC=ECI
U.S. and Chinese negotiators also meet this week for their
first in-person talks since agreeing to a truce to their trade
dispute at a Group of 20 meeting last month.
However, expectations for progress during the two-day
Shanghai meeting are low, so officials and businesses hope
Washington and Beijing can at least detail commitments for
"goodwill" gestures and clear the path for future negotiations.
Trump warned China against waiting out his first term in
office to finalize any trade deal, saying if he wins re-election
in the November 2020 U.S. presidential contest, the outcome
could be no agreement or a worse one. Supply risks are still a concern as tensions remained high
around the Strait of Hormuz, through which about a fifth of the
world's oil passes.
BP Plc BP.L has not taken any of its own oil tankers
through the strait since a July 10 attempt by Iran to seize one
of its vessels, its chief financial officer said. Meanwhile, the United States has formally asked Germany to
join France and Britain in a mission to secure the Strait of
Hormuz and to combat Iranian aggression, the U.S. Embassy in
Berlin said. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic-Trade tensions boost U.S. rate-cut expectations png https://tmsnrt.rs/2KdE2by
TECHNICALS-U.S. oil may rise into $57.56-$58.25 range
oil may rise into $64.28-$64.67 range
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