US-china trade tensions, Chinese tariffs in focus

Oil prices inched higher on Tuesday, though gains were checked amid an escalation in the trade war between the United States and China.

Brent crude futures were at $70.27 a barrel at 0104 GMT, up 6 cents, or 0.1%, from their last close. Brent ended the previous session little changed.

U.S. West Texas Intermediate (WTI) crude futures were at $61.17 per barrel, up 12 cents, or 0.2%, from their previous settlement. WTI closed the last session steady on the day.

Analysts said the U.S.-China trade war was overshadowing the market, though market fundamentals provided some support.

“A full-blown trade war would have lasting consequences on global growth, seriously limiting the upside for energy demand. Disruptions have balanced the market, but lower demand and rising U.S. production could make for a quick reversal,” said Alfonso Esparza, senior market analyst, OANDA.

China defied a warning from U.S. President Donald Trump and moved to impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas.

Focus was also on the Middle East after Saudi Arabia on Monday said that two of its oil tankers were among those attacked off the coast of the United Arab Emirates and described it as an attempt to undermine the security of crude supplies amid tensions between the United States and Iran.

The U.S. Energy Department said on Monday that it was confident global oil markets are well supplied.