(Bloomberg) -- Oil jumped as Libyan exports continued to slump and expectations rose that the Federal Reserve will be more aggressive in cutting rates this week.

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West Texas Intermediate advanced more than 2% to settle above $70 a barrel while Brent futures settled just shy of $73 a barrel. Libyan exports have declined markedly as United Nations-led talks failed to break an impasse over control of the central bank, which has spilled over into its oil industry.

The market is also focused on the Fed and continued disruption of US Gulf of Mexico production after last week’s storm, said Dennis Kissler, senior vice president for trading at BOK Financial Securities. The Federal Reserve is expected to lower interest rates for the first time in more than four years this week, with some traders and economists preparing for a half-point reduction.

Meanwhile, around 12% of current oil production in the Gulf remains shut in after Francine hit the Louisiana coast last week, according to the Bureau of Safety and Environmental Enforcement.

The combination of the Gulf production shut-ins “along with the expectations of a half-point rate cut from the Fed is bringing the buyers back to crude, at least for the near term,” Kissler said.

The moves come against the backdrop of record negative positioning. With speculative positions in Brent turning net-short for the first time, trend-following funds are near their most bearish levels in the oil market, according to EA Quant Analytics, a sign that one source of selling pressure may now abate.

Crude is still sharply down this quarter on rising non-OPEC output and signs of weakening demand in the US and China. Chinese data over the weekend showed industrial output in the longest slowing streak since 2021 and investment falling more than expected.

The market is also tracking Typhoon Bebinca, which made landfall near Shanghai. It’s the strongest storm to hit China’s financial capital and major shipping hub since 1949. Financial markets in the country are closed on Monday and Tuesday for a national holiday.

“Ongoing supply losses from Libya and improved OPEC+ compliance from Russia should keep global oil markets in a small counter-seasonal deficit,” in the fourth quarter, Citigroup Inc. analysts including Max Layton said in a note. “Yet we still see a shift as the market starts to price 2025,” with a surplus expected, they added.