Oil exchange traded funds experienced their largest intraday jump in over six years on Thursday as supply disruptions overseas and rising global sentiment triggered short-covering from bearish traders who were caught with their pants down.

On Thursday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, increased 7.6% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, gained 6.3%. The bounce comes after USO fell 37.3% and BNO retreated 33.0% year-to-date.

Meanwhile, COMEX WTI crude oil futures were trading 9.2% higher at $42.2 per barrel. Brent crude oil futures gained 8.2%, rising to $46.7 per barrel.

Oil prices regained some ground Thursday after Royal Dutch Shell declared force majeure, or unforeseeable circumstances that impeded its ability to fulfill a contract, on shipments of Nigerian crude oil due, reports Barani Krishnan for Reuters.

The global market rebound and an upwardly revised second quarter U.S. economic growth also added to further gains in crude prices.

Additionally, the swift turn around in oil prices caught many bearish short traders off guard, prompting many traders to unwind those positions.

A short position is a sale on a borrowed security. The investor needs to eventually return the borrowed stock by purchasing it back from the open market. If the price falls, the investor buys it back for less than he or she sold it for and pockets the profit.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.