NEW YORK (MarketWatch) — Oil prices soared Friday, achieving their biggest daily percentage gain in two and a half years, yet still wrapped up January with a big loss.
Analysts said factors behind oil’s jump on Friday included news of a huge drop in U.S. rig counts as producers respond to oversupply, as well as short covering on the last day of the month.
Light, sweet crude for March delivery CLH5, +7.05% on the New York Mercantile Exchange, also known as West Texas Intermediate, settled up by $3.71, or 8.3%, at $48.24 a barrel. It was the largest one-day percentage advance since June 2012, coming just one day after the contract traded below the $44-a-barrel level for the first time in nearly six years.
For the week, the U.S. oil benchmark gained 5.8%, leaving it down 9.4% for the month after it earlier showed a double-digit percentage decline for January. WTI has dropped for seven months in a row, and it remains off 55% from its June peak.
The number of U.S. oil-drilling rigs dropped by 94 in the past week, representing the largest one-week decrease since at least 1987, according to data out Friday from oilfield-services firm Baker Hughes.
The rig-count news, short covering and technical factors helped drive oil higher Friday, said Phil Flynn, senior market analyst at the Price Futures Group. He said his firm had been keep an eye on the $44-a-barrel level for WTI, and that area — “a big support line” ended up holding this week.
“That was probably a final sign to shorts that they better take their money,” Flynn told MarketWatch.