(Updates prices, adds comment)

By Noah Browning

LONDON, July 7 (Reuters) - Oil prices rose on Thursday after steep losses in the previous two sessions, as investors returned their focus to tight supply even as fears of a global recession persisted.

Brent crude futures rose 61 cents, or 0.6%, to $101.30 a barrel by 1121 GMT. WTI crude futures climbed 65 cents, or 0.7%, to $99.18 a barrel.

Trade was volatile, with prices at one stage showing losses of about $2 but then gaining nearly $1.

"With Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of $100 oil will be with us for some time yet," said Jeffrey Halley, a senior market analyst at OANDA.

Traders are watching for possible oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days.

Exports via the CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning.

In a sign that oil supply may remain tight, Washington tightened sanctions on OPEC member Iran on Wednesday, pressuring Tehran as it seeks to revive a 2015 Iran nuclear deal.

Oil prices have dropped in the past few weeks, highlighting fears of a sharp economic slowdown and a hit to demand for commodities.

Brent and WTI closed on Wednesday at their lowest since April 11. The declines follow a dramatic fall on Tuesday when WTI slid 8% while Brent tumbled 9% - a $10.73 drop that was the third biggest for the contract since it started trading in 1988.

"Recession fears continue to grow and that obviously does raise some concerns for the demand outlook," said Warren Patterson, ING's head of commodity research.

"However, supportive fundamentals should mean that further downside is relatively limited." (Additional reporting by Florence Tan in Singapore and Stephanie Kelly in New York; Editing by Kim Coghill, Jason Neely and Jane Merriman)