US crude futures rise $2.66/bbl on short-covering

HOUSTON (ICIS)–NYMEX crude futures for October delivery closed out the week on a strong note, settling at $45.22/bbl, up $2.66, extending the previous session’s gains on short-covering.

The market was in oversold conditions and in need of a correction after hitting a 6½ year low of $37.75/bbl on Monday.

A feeding frenzy across the energy complex un-coupled from weakness in the stock market and the dollar rising against the euro, forces that normally discourage buying.

The rally paused briefly following the release of the Baker Hughes drilling rigs report showing US companies adding rigs for the sixth consecutive week.

Despite the strong two-day gains, the market’s bias remains to the downside with no sign of staging a trend reversal since market fundamentals remain bearish.

Upside momentum lifted West Texas Intermediate (WTI), the US benchmark, to hit an intra-day high of $45.90/bbl, up $3.34, before the buying was exhausted on Friday.

October ICE Brent established an intra-day high of $50.98/bbl before pulling back on profit taking to settle at $50.05/bbl, up $2.49.