Oil rises as fears of oversupply ebb

NEW YORK (Reuters) – Oil prices rose on Tuesday as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from trade tensions between that country and the United States.

Brent crude LCOc1 settled 38 cents higher at $ 73.44 a barrel, after it reached a high session of $ 74.

U.S. West Texas Intermediate (WTI) CLc1 was up 63 cents, or nearly 1 percent, to settle at $ 68.52. Earlier in the day, WTI reached a high of $ 69.05.

Reports that China will increase infrastructure spending helped U.S.-China trade tensions will reduce the country's demand for oil, said Phil Flynn, badyst at Price Futures Group in Chicago.

"That's going to be very bullish for oil demand," Flynn said. "Infrastructure spending from China in the past, and I think it's adding up."

After an 8 percent decline in multi-year highs , vice president of market research at Tradition Energy in Stamford, Connecticut.

With significant reductions in crude inventories because of strong global growth, the supply-and-demand picture will remain significant in the United States.

Still, commitments from the countries to increase production limited further gains, as they move amidst disruptions in Libya and global rectify demand, said Jim Ritterbusch, president of Ritterbusch and Associates.

Market sentiment has been driven by fears that could be disrupted by confrontation in the Middle East or that Washington's trade dispute with major trading partners could dampen global growth.

Iran, OPEC's third-largest producer, which pumps 3.75 million barrels per day, has come under increasing U.S. pressure, with the administration of President Donald Trump pushing countries to cut Iranian oil beginning in November.

GRAPHIC – Russia, Saudi Arabia Oil Production 2018: tmsnrt.rs/2L6ck2a

Saudi Arabia and other large producers are ramping up their output to offset their losses.

Meanwhile, U.S. crude inventories at the U.S. crude futures delivery hub at Cushing, Oklahoma in the furnace days, according to data supplier Genscape, traders said.

Stockpiles at the hub were expected to fall for the 10th consecutive week, traders said. Total U.S. crude stocks were expected to fall 2.3 million barrels last week, according to a Reuters poll. [EIA/S]

U.S. industry group at the American Petroleum Institute will release inventory data for last week at 4:30 pm EDT (2030 GMT) on Tuesday. Official U.S. Energy Department data will follow on Wednesday.