Oil rebounded over 2% today after posting the biggest two-day loss for the start of a year in three decades with the shutdown of a US 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 US and China, looked weak.
Helping drive the gains today was a statement from top US pipeline operator Colonial Pipeline, which said last night that its Line 3 had been shut for unscheduled maintenance with a restart expected on January 7.
Tamas Varga of oil broker PVM said the rebound was due to the pipeline shutdown and added: "There is no doubt that the prevailing trend is down; it is a bear market."
Brent crude was up $1.63, or 2.1%, to $79.47 a barrel this afternoon, while US West Texas Intermediate crude gained $1.41, or 1.9%, to $74.25.
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.
Figures yesterday showing US manufacturing contracted further in December pressured prices, as did concerns about economic disruption as Covid-19 works its way through China, which has abruptly dropped strict curbs on travel and activity.
"China's pandemic and reopening challenges weigh on the market mood and put the bull thesis of a demand rebound under scrutiny," said Norbert Rücker, analyst at Swiss private bank Julius Baer.
Also weighing were inventory figures from the American Petroleum Institute, which according to market sources showed a rise in US crude and gasoline stocks.
