Oil prices extended gains on Tuesday amid strong U.S. manufacturing data and a pipeline attack in Nigeria.

Light, sweet crude for March delivery rose 2.80 dollars to settle at 72.23 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for March delivery rose 2.94 dollars to 76.05 dollars a barrel on the ICE Futures Exchange.

Oil prices rebounded on Monday after the Institute of Supply Management (ISM) reported Monday that ISM manufacturing industries composite index jumped higher in January, suggesting faster expansions in the sector. The report prompted optimism about U.S. economic outlook and oil demand.

Worries about oil production also helped boosting crude prices. Anglo-Dutch oil group Royal Dutch Shell on Monday said it was forced to cut output after a key supply pipeline in southern Nigeria was sabotaged on Saturday. The company gave no timeline for fixing the pipe and restarting the flow of oil.

The attack happened just hours after Nigeria's main militant group, the Movement for the Emancipation of the Niger Delta (MEND), declared an end to ceasefire and threatened to resume attacks against Africa's biggest oil and gas industry.

Niger Delta issued a statement on Monday saying they were not involved in the Shell pipeline attack.