LONDON: Brent crude oil rose above $105 per barrel on Tuesday, rallying from an eight-month low after China's inflation slowed, giving it room to keep monetary policy easy and support oil demand in the world's second-biggest consumer.
Oil prices were also underpinned by worries over increasing tension in North Korea and a stalemate in talks between Iran and Western nations, raising fears of a possible disruption to fuel supplies from the Middle East.
But investors were worried that faltering global growth and deep recession in parts of Europe will cap energy demand at a time of increasing global supply, keeping a lid on oil prices.
"The oil price fall has been excessive and some traders see a buying opportunity," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
"But with oil stocks so high, supply improving and the outlook for oil demand so uncertain, there seems to be little basis for a strong, sustained rally."
Brent futures for May rose 40 cents to $105.06 per barrel by 0815 GMT, after moving in a $2 range and finishing 0.5 percent higher in a choppy session on Monday. US crude futures rose 34 cents to $93.70 per barrel.
China's annual consumer inflation eased to 2.1 percent in March from 3.2 percent in February, while producer price deflation deepened, data showed on Tuesday.
"Softer-than-expected inflation is supportive to oil markets," said Ben Le Brun, analyst at OptionsXpress in Sydney.
