Oil rises ahead of key central bank meetings amid heightened Mideast tensions

Oil prices rose in early Asian trade on Tuesday ahead of global central bank meetings and as tensions in the Middle East remained high.

Brent crude futures rose 46 cents, or 0.53 per cent, to $87.91 a barrel by 0001 GMT while U.S. West Texas Intermediate crude climbed 33 cents, or 0.4 per cent, to $83.64 a barrel.

Oil fell more than 3 per cent on Monday as Israel’s attacks on Gaza escalated although fears eased that the Israel-Hamas war would disrupt supply from the region.

Israeli troops and tanks attacked Gaza’s main northern city from the east and west on Monday, three days after it began ground operations in the Palestinian enclave.

Traders were also keeping a close eye on global monetary policy, with rate-setting meetings of major central banks scheduled for this week.

The Bank of Japan (BOJ) will be the first with its meeting on Tuesday where it is likely to revise up its inflation forecasts and discuss further tweaks to its bond yield curve control (YCC).

Speculation grew on Monday that the BOJ would act after Nikkei, citing sources close to the matter, reported that policymakers may further tweak YCC to allow the 10-year Japanese government bond yield to rise above 1 per cent.

The U.S. Federal Reserve will meet on Wednesday and the Bank of England on Thursday to discuss monetary policy and decide on potential future inflation-busting interest rate hikes. The Fed is expected to keep interest rates unchanged.

Investors are also expecting Chinese purchasing managers index data and third quarter gross domestic products figures from Hong Kong and Taiwan.