Oil recovered from three-month lows to rise by more than $1 today as supply concerns returned to centre stage in a market that has come under pressure from growing evidence of slower fuel demand.
US crude rose $1.11 to $119.67 a barrel by 10.24am, after the contract recovered from a three-month-low hit in the previous session.
London Brent crude climbed $1.28 to $118.28.
Supply concerns came to the fore again, as the Baku-Tbilisi-Ceyhan pipeline with a capacity of one million barrels per day of Azeri light crude remained closed following a fire, for which Kurdish separatists claimed responsibility.
A source in Turkey's state-owned pipeline company Botas said the pipeline fire would last for two more days and it could take up to two weeks for the pipeline to restart.
The pipeline explosion in Turkey highlights the growing influence of geopolitical factors on the oil market.
Oil supplies from OPEC member Nigeria have been repeatedly disrupted by militant attacks, while escalating tension between Iran, the world's fourth largest producer, and the West over Tehran's nuclear programme has the potential to cripple global oil supplies.
However, oil is almost 20 per cent off the record of $147.27 a barrel hit on July 11th and prices have fallen across the commodities complex.
Data from the US government's Energy Information Administration yesterday showed a much steeper than expected build in crude stocks, the latest sign soaring fuel costs and an ailing economy have reduced oil demand.
Crude oil inventories rose by 1.7 million barrels in the week to Aug. 1, beating expectations of a 300,000-barrel build. Distillate stocks, including heating oil and diesel, rose by 2.8 million barrels, also above forecasts.