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Oil prices edge up, supported by Iran ship attack, US-China trade detente

[SINGAPORE] Oil prices were little changed on Monday, holding onto 2 per cent gains from Friday amid renewed geopolitical tensions in the Middle East, while a detente in the US-China trade war buoyed market sentiment.

Brent crude futures rose 9 cents to US$60.60 a barrel by 1208 GMT, while US West Texas Intermediate (WTI) crude futures was at US$54.79 a barrel, up 9 cents.

Both contracts rose more than 3 per cent last week, their first weekly gain in three weeks.

Most of the gains were posted on Friday after an Iranian oil tanker was attacked off Saudi Arabia's coast in the Red Sea. Investigations are under way to determine if the tanker was hit by missiles, which could ratchet up tensions between Tehran and Riyadh if confirmed.

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The emergence of a phase 1 trade deal between the United States and China and a goodwill move by Washington to suspend threatened tariffs on Chinese products also lifted global financial markets.

Investors remained cautious given that few details emerged from the talks, while it may take another five weeks for the two countries to sign a pact.

"Traders view the deal in a tentative light as a tariff detente falls well short of bridging the critical trust gap which is an implicit removal of a significant chunk of existing tariff," said Stephen Innes, Asia Pacific market strategist at AxiTrader in a note.

"This baby-step agreement could take weeks to iron out."

REUTERS