New York's main contract, light sweet crude for delivery in July, climbed 80 cents to 69.78 dollars per barrel in electronic deals before the official opening of the US market.

In London, Brent North Sea crude for August delivery gained 86 cents to 68.97 dollars per barrel in electronic trading.

"Oil futures were higher, bouncing a little after yesterday's fall," Sucden analyst Sam Tilley said.

"The market is still range bound at the moment, as many who would probably like to sell the market fail to do so on fears of a spike higher from any kind of geopolitical or weather-related news," he added.

US President George W. Bush on Monday warned Iran -- the world's fourth biggest producer of crude oil -- of "progressively stronger political and economic sanctions" if Tehran refused to freeze sensitive nuclear activities in return for talks.

Analysts say that Iran, the world's fourth largest crude producer, could cut exports if UN sanctions were imposed to force it to stop enrichment.

The United States suspects Iran of trying to acquire nuclear weapons under the guise of producing nuclear energy, while the Islamic republic maintains its nuclear programme is strictly civilian.