World oil prices rebounded back above 120 dollars on Thursday, after a statement that a pipeline carrying crude from Asia to the West would remain shut for about 15 days after a recent explosion.

Prices had dropped on Wednesday owing to news of a surprise jump in US crude reserves amid a fall in energy demand in the United States, traders said.

"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 Andrey Kryuchenkov, an oil analyst at the Sucden Research brokerage in London.

New York's main contract, light sweet crude for September delivery jumped 1.65 dollars to 120.23 dollars a barrel in electronic deals onThursday

Brent North Sea crude for September rallied 1.55 dollars to 118.55 dollars a barrel.