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Oil recovers from 2-week low; US-China trade war caps gains

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Oil prices edged higher on Monday, rebounding from a two-week low in the previous session, although gains were checked by concerns about the outlook for the global economy.

[SYDNEY] Oil prices edged higher on Monday, rebounding from a two-week low in the previous session, although gains were checked by concerns about the outlook for the global economy.

US West Texas Intermediate (WTI) crude futures rose 14 cents, or 0.3 per cent to US$56.05 a barrel. WTI fell to US$54.75 a barrel on Friday, its lowest since Sept 13, when prices closed down 0.9 per cent.

Brent crude futures rose 21 cents, or 0.3 per cent, to US$62.12 a barrel, having dipped as low as US$60.76 a barrel on Friday when prices fell 1.3 per cent.

Saudi Arabia's crown prince warned in an interview broadcast on Sunday that oil prices could spike to "unimaginably high numbers" if the world does not come together to deter Iran, but said he would prefer a political solution to a military one.

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Yemen's Houthi movement said on Saturday it had carried out a major attack near the border with the southern Saudi region of Najran and captured many troops and vehicles, but there was no immediate confirmation from Saudi Arabian authorities.

Still, oil remains under pressure as traders weigh the impact on the global economy of a prolonged trade war between the US and China.

"With Saudi oil production mostly back online, the focus shifts again to the trade war narrative and consequential demand devastation, which is getting intensified by the US administration's possible capital clampdown as they investigate the efficacy of capping US investment flows into China," said Stephen Innes, market strategist, SPI Asset Management.

US President Donald Trump's administration is considering delisting Chinese companies from US stock exchanges, three sources said, in what would be a radical escalation of US-China trade tensions.

REUTERS