Oil hovers around $60 as US-China trade tensions weigh

Key Points
  • Sino-U.S. trade war stokes concerns over global growth.
  • Traders look to U.S. inventory data.
Justin Solomon | CNBC

Oil prices rebounded slightly on Tuesday from big falls in recent sessions, but Brent crude remained near eight-month lows around $60 a barrel due to escalating trade tensions between China and the United States.

Brent prices have lost more than 9% in the past week, with U.S. President Donald Trump vowing to impose new tariffs on Chinese imports, and China making further moves against U.S. agricultural cargoes.

The United States also responded to a decline in China's yuan on Monday by branding the country a currency manipulator.

International benchmark Brent futures were up 28 cents at $60.09 a barrel by 0910 GMT, having dipped earlier in the session to their lowest since Jan. 14 at $59.07.

West Texas Intermediate crude futures rose 38 cents to $55.07 per barrel.

With global equities hitting a two-month low on Monday, Brent fell more than 3% that day as traders worried the dispute between the world's two biggest oil buyers would dent demand, helping to prompt Tuesday's short-covering.

"It's difficult for oil to hold (up) when you have such moves in equities," Petromatrix analyst Olivier Jakob said.

"Brent at $60 a barrel is an important support level. It would be difficult for Brent to collapse below this level unless there is a further collapse in equities."

Meanwhile, Iran has threatened to block all energy exports out of the Strait of Hormuz, through which a fifth of global oil traffic passes, if it is unable to sell oil as promised by a 2015 nuclear deal in exchange for curbing uranium enrichment.

Britain on Monday joined the United States in a maritime security mission in the Gulf to protect merchant vessels after Iran seized a British-flagged vessel.

Oil prices could find some support later on Tuesday, with a Reuters poll showing U.S. crude oil inventories were expected to have fallen for an eighth consecutive week.

The American Petroleum Institute is set to release its weekly inventory data at 4:30 p.m. EDT (2030 GMT), with official government numbers to follow on Wednesday.