Oil prices rebound on short-covering amid ongoing tariff concerns

Oil prices rose on Tuesday as investors took advantage of the previous day's losses to cover short positions, though concerns persist over economic headwinds from tariffs and US monetary policy that could dampen fuel demand.

  Brent crude futures rose 90 cents, or 1.4 per cent, to $67.16 a barrel by 0901 GMT. The US West Texas Intermediate crude contract for May, which expires on Tuesday, was up 97 cents, or 1.5 per cent, at $64.05.

The more actively traded WTI June contract gained 92 cents, or 1.5 per cent, to $63.33.

The Brent and WTI benchmarks dropped more than 2 per cent on Monday, as signs of progress in nuclear deal talks between the US and Iran helped to ease supply concerns.

"Some short-covering emerged after Monday's sharp sell-off," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment.

On Monday US President Donald Trump repeated his criticism of Federal Reserve Chair Jerome Powell and said the US economy could slow unless interest rates were lowered immediately.

His comments about Powell fuelled fears for the Fed's independence in setting monetary policy and the outlook for US assets. Major US stock indexes dropped and the dollar index slid to a three-year low on Monday.

"The price drop on Monday looked a bit excessive in my view, considering that oil demand remains solid, so we might have some reversal today," said UBS analyst Giovanni Staunovo.

Progress in talks between the US and Iran, which on Saturday agreed to begin drawing up a framework for a potential nuclear deal, could also result in Trump backing off from efforts to choke off the Middle East country's oil exports.

Meanwhile, Russia's economy ministry has cut its forecast for the average price of Brent crude in 2025 by nearly 17 per cent from its projection in September, according to documents seen by Reuters.

US crude oil and gasoline stockpiles were expected to have fallen last week, while distillate inventories are likely to have risen, a preliminary Reuters poll showed on Monday, ahead of weekly reports from the American Petroleum Institute and the Energy Information Administration. 

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