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London: Oil recovered from three-month lows to rise $2 yesterday 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 $2 to $120.58 a barrel by 1441 GMT, after the contract recovered from a three-month-low hit in the previous session.
London Brent crude climbed $1.95 to $118.95.
Supply concerns came to the fore 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 pipe-line fire would last for two more days and it could take up to two weeks for the pipeline to restart.
Geopolitical factors
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 11 and prices have fallen across the commodities complex.
"While in our view many of the fundamentally bullish elements of the market remain in place, buying interest has for now taken a step back," Harry Tchilinguirian, oil analyst at BNP Paribas, said in a research note.
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