Oil prices surge nearly $4 a barrel after sharp fall
Crude oil prices have increased by nearly USD 4 a barrel over a record decline in the number of oil drilling rigs in the United States.
On Friday, the US benchmark West Texas Intermediate (WTI) for March delivery suddenly soared to over USD 48.24, up USD 3.71 from the day before.
European benchmark Brent crude for March also followed a similar pattern, trading at USD 52.99 a barrel, a gain of USD 3.46.
The surge was triggered by the data provided by oilfield services giant Baker Hughes, showing the number of US oil drilling rigs dropped by 94 -- or seven percent -- this week.
“This is another sign that the drop in energy prices is going to impact future production of oil,” said Phil Flynn, an executive at the Chicago-based Price Futures Group.
Some observers argued that short-covering by big investors on the final trading day of January was likely responsible for the unexpected rise in oil prices.
"The commodity funds have been heavily short on this market. It's the end of the month, and there is a little bit of a short-covering rally," Flynn added.
Oil prices have slumped more than 50 percent since June last year over increased supplies by certain countries such as Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries (OPEC), and lackluster global economic growth.
OPEC, which pumps out about 40 percent of the world’s oil, has so far refrained from cutting its production to balance the market mainly due to opposition from Saudi Arabia. It produces about 30 million barrels of crude per day.
MSM/AS/MHB
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