Brent crude rose on Tuesday, after earlier falling to its lowest since January, as traders betting on decreasing prices bought back contracts to lock in profits from recent declines caused by the escalating trade dispute between the US and China.
Brent prices have plunged 7.6 percent since their close on July 31, the day before US President Donald Trump vowed to impose new tariffs on Chinese imports, causing China to retaliate against agricultural imports from the United States.
This, in turn, responded to a decline in the Chinese yuan on Monday by branding the country a currency manipulator later in the day.
Brent fell more than 3 percent on Monday as traders are concerned the ongoing trade dispute between the world's two biggest oil buyers will dent demand.
Brent crude futures climbed 47 cents, or 0.8 percent, to $60.28 a barrel by 0351 GMT (0651am Riyadh time) after earlier dipping to $59.07, their lowest since Jan. 14.
West Texas Intermediate (WTI) crude futures rose 47 cents, or 0.9 percent, to $55.16 per barrel.
"The market is back short-covering and there's also some amount of profit-booking today," said Sukrit Vijayakar, director of Indian energy consultancy Trifecta, referring to when traders with short positions, or bets on falling prices, buy back futures to lock in profits.
The US accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade. The falling yuan would support Chinese exports by making them cheaper but would raise the cost of oil imports that are priced in dollars.
"Oil prices can't shake off falling demand concerns, as China's latest escalation with devaluing the yuan and limiting US agricultural purchases derail hopes for a trade deal to be reached this year," said Edward Moya, senior market analyst at OANDA in New York.
Concerns that the trade conflict has entered a phase of retaliatory action were weighing down on the sentiments in the oil market, which at the moment is taking lesser notice of the Middle East tensions, analysts said.
"Despite the ongoing threat of supply disruption in the Middle East, it is clear that the US-China trade dispute is of more significant concern at the moment," Stephen Innes, managing partner at VM Markets, said in a note.
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