09:11 AM EDT, 09/16/2024 (MT Newswires) -- Oil prices rose early on Monday as tight supply on reduced output from the Gulf of Mexico and Libya offset further weak economic data from China ahead of expected U.S. interest-rate cuts this week.

West Texas Intermediate crude oil for October delivery was last seen up US$0.80 to US$69.45 per barrel, while November Brent crude, the global benchmark, was up US$0.71 to US$72.32.

The rise comes even as China, the No.1 importer, over the weekend reported the latest in a series of weak economic reports. Reuters reported the country's industrial output weakened in August, while retail sales and new home prices dropped again.

Weak demand from China was behind cuts to 2024 demand forecasts from OPEC, the Energy Information Administration and the International Energy Agency last week. Brent oil prices have dropped 18% over the past six months due to China's slow economy even as global demand remains above production.

"Last week the IEA and OPEC in their monthly reports for once, in varying degrees, agreed that oil demand in the future looked increasingly problematic with much of the worry in forecast emanating from the state of China," PVM Oil Associates noted. "Those concerns are once again with merit as data over the weekend continued to point to an economy in decline."

Supply remains tight, with Libya's exports still disrupted amid a power struggle between the North African country's two competing governments, while Gulf of Mexico production is still recovering from last week's passage of Hurricane Francine. The U.S. offshore regulator on Sunday reported 338,690-barrels per day of gulf oil production remains offline, 19% of the region's output.

Still, much attention will be focused on the possibility of an outsized cut to U.S. interest rates coming at the Wednesday afternoon end of the two-day meeting of the Fed's policy committee. The CME Fedwatch tool sees a 65% probability of a cut of 50 basis points to rates and a 35% chance of a 25-point cut.