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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.
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 at 1306
GMT, while U.S. 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.
Reflecting near-term bearishness, the nearby contracts of the
two benchmarks traded at a discount to the next month, a
structure known as contango.
On Wednesday, figures showing U.S. 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
U.S. crude and gasoline stocks.
Official inventory data from the Energy Information
Administration is out at 1530 GMT.
(Additional reporting by Stephanie Kelly and Jeslyn Lerh;
Editing by Mark Potter, Elaine Hardcastle)
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