Oil prices rose more than 1% on Tuesday, reversing the prior session's losses on a brightening short-term outlook tied to the prospect of slightly tightening supplies as trade thinned ahead of the Christmas and Hanukkah holidays.

Oil futures ended higher in thin holiday trading conditions Tuesday, with support tied in part to lingering geopolitical worries around Russia and the Middle East, though upside remains capped by expectations for a crude surplus amid a shaky outlook for demand.

Oil prices have declined slightly due to profit-taking, but geopolitical tensions and a potential Fed rate cut could push prices higher.

Oil prices were up on Tuesday in thin trade ahead of the Christmas Day holiday, with prices supported by U.S. economic data and rising oil demand in India, the world's third-largest oil importer. Brent crude futures were up 33 cents,

Oil futures ended modestly lower Monday, extending a decline seen the previous week in response to a surging U.S. dollar and worries about the outlook for demand — particularly from China, the world’s largest crude importer.