* Trade dispute between U.S. and China unsettles markets
* Conflict in Syria also keeps markets on edge
* U.S. drillers add 11 rigs drilling for new oil
* Graphic on U.S. vs China tariffs: https://tmsnrt.rs/2GXE9qr (Updates with comment, refreshes prices)
LONDON, April 9 (Reuters) - Oil rose on Monday, boosted by investor caution over an air strike on a Syrian air base over the weekend, which overshadowed some of the concern that has undermined the crude market over an intensifying trade dispute between China and the United States.
Syria and its main ally Russia blamed Israel for carrying out an attack on a Syrian air base near Homs on Monday which followed reports of a poison gas attack by President Bashar al-Assad's forces on a rebel-held town.
The Pentagon formally denied a Syrian state television report that the U.S. military had fired missiles at a Syrian government air base.
Brent crude futures were last up $1.06 on the day at $68.17 a barrel by 1400 GMT, up from a session low of $67. The price approached its lowest in three weeks last week.
U.S. WTI crude futures were up 96 cents at $63.02, up from the day's low at $61.93.
Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China over Twitter, reigniting fears of a trade war between the world's two largest economies.
"This might be a bit of a technical rebound and otherwise, there is some attention being paid to the geopolitical noise around Syria and with the presidential tweets over the weekend," Petromatrix strategist Olivier Jakob said.
"$63 was the anchor last week (for WTI futures) and right now it looks like we're moving back into that range," he said.
The oil price is up by nearly 2 percent so far this year, thanks to healthy demand and supply restraint led by the Organization of the Petroleum Exporting Countries, which started in 2017 to rein in oversupply and prop up prices.
"Oil prices have been susceptible to the brewing trade tensions between China and the U.S. ... However, fundamental support levels have been demonstrated with OPEC's suggestion on a production limit extension into 2019," said Singapore-based Phillip Futures.
In physical oil markets, OPEC's No.2 producer Iraq said on Monday that it will keep prices steady for its May crude supplies.
West Africa's crude oil loadings for Asia are set to fall to a five-month low in April, dragged down by a backlog of cargoes outside China and strong Brent prices that hindered new bookings, a Reuters survey of shipping fixtures and traders showed on Friday.
In the United States, drillers added 11 rigs in the week to April 6, bringing the total count to 808, the highest level since March 2015, General Electric's Baker Hughes energy services firm said on Friday.
The premium of Brent crude over WTI futures has reached its largest since mid January, reflecting some of the investor caution over rapidly expanding U.S. output against the cuts in output of OPEC crude, much of which is linked to the Brent price.
The Brent/WTI spread is above $5 a barrel, up from closer to $3 a month ago.
"Institutional investors are taking these differences into account and positioning themselves accordingly with respect to the two oil types," Commerzbank analysts said in a note.
(Additional reporting by Henning Gloystein in SINAGPORE Editing by David Evans and David Goodman)