Triggering the sudden jump in oil prices, oil-field services company baker Hughes revealed that the number of domestic drilling rigs declined 7% for the week to 1,223, the lowest level in three years, which would affect the future supply outlook.
“This is another sign that the drop in energy prices is going to impact future production of oil,” Phil Flynn , an account executive at Price Futures Group, said in the WSJ article. “People who have been short are starting to have second thoughts about staying short at this level.”
Additionally, geared ETFs that take leveraged position on oil futures also jumped on the bullish turn. The ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO), which takes the two times or 200% daily performance of WTI crude oil, increased 14.4% Friday while the VelocityShares 3x Long Crude ETN (NYSEArca: UWTI), which tracks three times or 300% the daily performance of WTI crude, gained 21.3%.
United States Oil Fund
For more information on the oil market, visit our oil category.
Max Chen contributed to this article.