Oil rebounded on Thursday after posting the biggest two-day loss for the start of a year in three decades with the shutdown of a U.S. fuel pipeline providing support, though economic concerns capped gains.
Big declines in the previous two days were driven by worries about a global recession, especially since short-term economic signs in the world's two biggest oil consumers, the United States and China, looked weak.
Helping drive the gains on Thursday was a statement from top U.S. pipeline operator Colonial Pipeline, which said late on Wednesday its Line 3 had been shut for unscheduled maintenance with a restart expected on Jan. 7.
"This morning's rebound is due to the shutdown of Line 3 of the Colonial pipeline," said Tamas Varga of oil broker PVM. "There is no doubt that the prevailing trend is down; it is a bear market," he added.
Brent crude was up $1.22, or 1.6%, to $79.06 a barrel at 0922 GMT, while U.S. West Texas Intermediate crude futures gained $1.02, or 1.4%, to $73.86.
Both benchmarks' cumulative declines of more than 9% on Tuesday and Wednesday were the biggest two-day losses at the start of a year since 1991, according to Refinitiv Eikon data.
Reflecting near-term bearishness, the nearby contracts of the two benchmarks traded at a discount to the next month, a situation known as contango. , < CLc1-CLc2>
On Wednesday, figures showing U.S. manufacturing contracted further in December weighed on prices, as have concerns about economic disruption as COVID-19 works its way through China, which has abruptly dropped strict curbs on travel and activity.
