LONDON, Aug 7: World oil prices rebounded towards $120 on Thursday after news pipeline carrying crude from Central Asia to the West would remain shut for about 15 days after a recent explosion.

New York’s main contract, light sweet crude for September delivery jumped $1.29 to $119.87 a barrel.

Brent North Sea crude for September rallied $1.03 to $118.03 per barrel.

“Overall, the market remains at a cross road. Market participants are torn between persistent fears over slowing energy demand and potentials for further supply disruptions,” said Sucden analyst Andrey Kryuchenkov.

It was announced on Thursday that the Baku-Tbilisi-Ceyhan (BTC) oil pipeline would remain shut for about 15 days after a blast occurred in a pump at a section in eastern Turkey.

British energy giant BP said it was looking at three alternative means of delivering supplies to Western clients. A spokesman also told AFP that the company had begun to limit its output.

“We have ramped down production,” he said. The spokesman added that following closure of the BTC pipeline, BP was looking into transporting the oil out of Azerbaijan either by rail, use of a Russian pipeline as far as the Black Sea, or via a pipeline than ended in Georgia.

A fire that started on Tuesday was likely to continue burning for another two days until the oil remaining in the pipe ran out, an official from Turkey’s state-run oil and gas company BOTAS told Anatolia news agency.

The BTC pipeline was inaugurated in 2006, carrying oil from the Caspian Sea fields to Turkey’s Mediterranean port of Ceyhan, from where tankers transport the crude to Western markets.

Despite modest price gains on Thursday, the oil market has dived lower this week on mounting concern that slower economic growth in the United States will translate into lower global energy demand.

On Monday, prices slumped under $120 a barrel in New York and London for the first time in three months, as a tropical storm looked set to miss energy installations in the Gulf of Mexico.

The US government meanwhile reported US consumer spending, which fuels two-thirds of output, had cooled in June and inflationary pressures accelerated. Prices extended their slide on Tuesday as signs of a slowing global economy raised further doubts about demand.

Crude futures also lost ground on Wednesday after news of a surprise jump in US oil reserves, traders said.—AFP