Crude-oil prices pared earlier losses on Tuesday, as increasing tensions between the U.S. and Iran and the threat of disruptions to supplies in the Middle East helped to offset lingering worries that a protracted trade conflict between the U.S. and China will hurt energy demand.

The U.S. will deploy four B-52 bombers to the Middle East, in response to what the Trump administration said are threats of a possible attack by Iran on American troops in the region, according to a report from CBS News.

The report “changed traders’ focus from trade war worries to real war worries,” Phil Flynn, senior market analyst at Price Futures Group told MarketWatch. “The switch from economic risk back to geopolitical risk the last few days has led to big swings both ways,” he said.

West Texas Intermediate crude for June delivery

CLM9, -1.32%

was down 74 cents, or 1.2%, to $61.51 a barrel on the New York Mercantile Exchange, after touching an earlier low of $60.66.

Global benchmark July Brent crude

LCON9, -1.45%

fell 80 cents, or 1.1%, to trade at $70.44 a barrel after settling Monday up 0.6%, on ICE Futures Europe. It touched a low of $69.38 on Tuesday.

“Oil prices remain volatile, with concerns a trade war could have reduce demand battling for attention that rising tensions in the Middle East could have a negative impact on supply,” said Colin Cieszynski, chief market strategist at SIA Wealth Management, in Tuesday morning note.

U.S. Trade Representative Robert Lighthizer said Monday that the Trump administration will increase tariffs on $200 billion in Chinese goods early Friday. The prospect of higher tariffs had been first raised on Sunday by President Donald Trump, rattling investors who had anticipated that better progress toward a near-term resolution between the two superpowers.

Read: With Trump threatening to tighten the trade screws, here’s a look at what tariffs have done so far

Treasury Secretary Steven Mnuchin, along with Lighthizer, told reporters that the U.S. administration was made aware over the weekend that China was trying to back away from “some of the language” that had been hammered out in earlier talks.

The Trump administration has said that tariffs on those Chinese goods will rise from 10% to 25% at 12:01 a.m. Eastern time Friday.

On Tuesday, The Wall Street Journal reported that China’s top trade negotiator, Vice Premier Liu He, would visit Washington to continue trade talks on Thursday and Friday.

Despite Tuesday’s slip for crude, market participants were taking a bullish note of oil’s resilience in Monday trade, with contracts managing slight gains after spending much of the session reflecting market fears about Sino-American trade tensions and its potential to hurt crude appetite.

In terms of fundamentals, Price Futures Group’s Flynn wrote in a Tuesday research note that signs of an increase in supplies also was putting pressure on crude, though he acknowledged that increases may be somewhat offset by the Organization of the Petroleum Exporting Countries’s — and major producers like Russia — cap on global output, as well as U.S. sanctions on key oil producing nations Venezuela and Iran.

“At the same time while we have seen an increase in [U.S.] oil supplies in recent weeks, the products like gasoline and distillates are a different story,” Flynn said. “Oil products are below average and that is going to force refiners to draw on supply.”

The Energy Information Administration will release its weekly report on U.S. petroleum supplies on Wednesday. Analysts polled by S&P Global Platts expect to see a fall of 2.2 million barrels in crude stockpiles for the week ended May 3. They also forecast supply declines of 980,000 barrels for gasoline and 1.05 million barrels for distillates, which include heating oil.

In its monthly Short-term Energy Outlook report released Tuesday, the EIA raised its forecasts for oil prices and U.S. crude production for this year and next. For 2020, it forecast domestic crude output of 13.38 million barrels a day. That’s up 2.2% from the forecast released in April.

On Nymex, June gasoline

RBM9, -2.35%

 fell by 2.2% to $1.953 a gallon, while June heating

HOM9, -1.03%

 traded at $2.049 a gallon, down 0.9%. June natural gas

NGM19, +0.99%

 climbed by 1% to $2.549 per million British thermal units, after losing 1.7% on Monday.

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