Oil soared nearly 8 percent on Friday as a cold snap boosted demand for heating oil and investors took advantage of the lowest prices since 2003 to close out some of their more profitable bets on price declines.
Short covering, the practice of buying back an asset sold previously at a higher price, has been enough of a catalyst to lift oil prices by 12 percent in just two days.
But it has stopped the oil price heading toward a near-17 percent drop in January, the largest slide in the first month of the year in at least a quarter of a century.
The world is still producing some two million barrels of oil a day more than it uses, and one of the warmest winters on record has destroyed typically heavy demand, leading to inventories of unwanted oil and oil products ballooning.
Money managers have racked up record-breaking bets against oil over the past few months. The price slide to its lowest since late 2003 this week provided a chance for them to book a profit on some of those positions, analysts said.
http://www.reuters.com/article/us-global-oil-idUSKCN0V002M
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