NEW YORK, July 30 (Xinhua) -- Oil prices extended gains on Tuesday as market participants are betting that the U.S. Federal Reserve would lower interest rates later this week, potentially boosting energy demand.
The West Texas Intermediate for September delivery gained 1.18 U.S. dollars to settle at 58.05 dollars a barrel on the New York Mercantile Exchange, while Brent crude for September delivery rose 1.01 dollars to close at 64.72 dollars a barrel on the London ICE Futures Exchange.
The U.S. central bank kicked off its two-day monetary policy meeting on Tuesday and will announce its decision on whether it will adjust interest rates Wednesday afternoon.
Investors are speculating that the Fed would cut interest rates this week for the first time in more than a decade by 25 basis points.
"The expectation that the U.S. Federal Reserve will lower interest rates tomorrow pushes the recently predominant concerns about demand somewhat into the background and brings the tight supply and supply risks more into focus," analysts at Commerzbank said in a note Tuesday.
Crude prices were also supported as concerns over supply side lingered amid the ongoing tensions in the Middle East.
Iran recently seized the British oil tanker, Stena Impero, in the Strait of Hormuz, after British authorities detained an Iranian oil tanker earlier this month in the Strait of Gibraltar on the allegations that "it was breaching EU sanctions on Syria."
The incident heightened tensions between Iran and the West, raising the potential for disruptions to the flow of crude through the Strait of Hormuz, experts noted. Enditem